Directors as Trustees of Company's Powers and Properties: Understanding the Justification for Fiduciary Duties

Abstract

Directors are trustees of their companies, with the effect that they stand in a fiduciary relationship with the companies and, ipso facto, owed to the companies the fiduciary duties of no conflict of interests and no self-profit. Directors’ fiduciary duties and legal consequences for breach are articulated in case law and provided in statutes of common law jurisdictions such as Nigeria and the United Kingdom. However, it is not self-evident why directors are thrust into a fiduciary relationship, and the justification for their fiduciary duties to the company. This article seeks to establish a functional basis for understanding the fiduciary concept, and the justification for the duties that flow from relationships that answer to the definition or description of a fiduciary. In particular, this article probes a juridical justification for fiduciary duties of company directors.

Keywords: Trustees, Fiduciaries, Company directors, Fiduciary duties, Conflict of interests, Secret profit

DOI: 10.7176/DCS/12-5-04

Publication date:May 31^st 2022