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Amazing experience
After placing an enquiry, I received a call 20 minutes later, and then 2 hours later, I had a solicitor assigned to me. They were absolutely incredible right from the word go - amazing and very prompt with replies, answering all my questions and keeping the process moving. We finally completed today and I am so unbelievably happy. I wouldn’t hesitate to use Lawhive again in the future if needed.
Lily
First class service
I initially made an online enquiry about a tricky conveyancing matter and received an immediate call back. They understood straight away what was needed and gave me a quote that was very reasonable. It was such a pleasure to find someone who was cheerful, professional and completely reassuring as I’d been getting quite anxious about the sale of my house. The service Lawhive has provided is absolutely first class and I cannot recommend them enough.
Charles
Empathetic, professional and efficient
I am an executor, selling my mother's home. I found the assistance I received from Lawhive first rate - empathetic, professional and efficient.
Mark
Great service from Lawhive
We used Lawhive for our conveyancing needs and our solicitor was very helpful, patient and informative. She helped us with our needs with prompt responses and provided a very efficient service.
Kelvin
Great service when you need clarity and calm
Our solicitor was warm, friendly and provided crystal clear communication. A lot of conveyancers assume customers know everything about the process already, so it was really appreciated to hear each stage included in the price given.
Em
Quick and efficient
We used Lawhive for a transfer of property and conveyancing. Our solicitor was so helpful and thorough with the whole process. He responded quickly and efficiently to any questions or requests that we had and explained some of the more complicated issues regarding the process clearly.
Geri
Fantastic service and experience with Lawhive
I had the pleasure of working with Lawhive doing a transfer of equity on a property. Our solicitor’s service was amazing, she responded quickly to any questions or concerns and kept me updated throughout the process. I can strongly recommend her for any conveyancing work that you may need. Fantastic service all round.
Jane
Amazing experience
After placing an enquiry, I received a call 20 minutes later, and then 2 hours later, I had a solicitor assigned to me. They were absolutely incredible right from the word go - amazing and very prompt with replies, answering all my questions and keeping the process moving. We finally completed today and I am so unbelievably happy. I wouldn’t hesitate to use Lawhive again in the future if needed.
Lily
First class service
I initially made an online enquiry about a tricky conveyancing matter and received an immediate call back. They understood straight away what was needed and gave me a quote that was very reasonable. It was such a pleasure to find someone who was cheerful, professional and completely reassuring as I’d been getting quite anxious about the sale of my house. The service Lawhive has provided is absolutely first class and I cannot recommend them enough.
Charles
Empathetic, professional and efficient
I am an executor, selling my mother's home. I found the assistance I received from Lawhive first rate - empathetic, professional and efficient.
Mark
Great service from Lawhive
We used Lawhive for our conveyancing needs and our solicitor was very helpful, patient and informative. She helped us with our needs with prompt responses and provided a very efficient service.
Kelvin
Great service when you need clarity and calm
Our solicitor was warm, friendly and provided crystal clear communication. A lot of conveyancers assume customers know everything about the process already, so it was really appreciated to hear each stage included in the price given.
Em
Quick and efficient
We used Lawhive for a transfer of property and conveyancing. Our solicitor was so helpful and thorough with the whole process. He responded quickly and efficiently to any questions or requests that we had and explained some of the more complicated issues regarding the process clearly.
Geri
Fantastic service and experience with Lawhive
I had the pleasure of working with Lawhive doing a transfer of equity on a property. Our solicitor’s service was amazing, she responded quickly to any questions or concerns and kept me updated throughout the process. I can strongly recommend her for any conveyancing work that you may need. Fantastic service all round.
Jane
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01 overview
Every company has to stick to high ethical standards, especially those in leadership roles with fiduciary duties.
Company directors of all types, even those not officially listed with Companies House have these duties, which they must take seriously. If they don't, they could cause harm to the company or, in some cases, put it at risk.
At Lawhive, our network of corporate solicitors is ready to offer expert advice at affordable fixed fees if you're dealing with a breach of fiduciary duties.
Contact our legal assessment specialists today to learn how we can assist.
Fiduciary duty is the connection between someone in a position of trust (a fiduciary) and the person they're helping, known as the principal or beneficiary.
When someone takes on a fiduciary role, such as a company director, they're legally responsible for taking care of the beneficiary's interests, being loyal to them, acting honestly, and keeping their information private.
Fiduciary duties make sure that the person or organisation in the position of trust acts fairly, honestly, and in the best interest of those they're helping.
Importantly, they're supposed to avoid situations where their interests clash with their duties. And, if they do find themselves in such a situation, they must prioritise the interests of those they're responsible for.
In the UK, lots of roles and positions are considered to have fiduciary duties because they involve a high level of trust and responsibility.
They include:
Company directors and officers make decisions that affect the company and its shareholders. Therefore, as part of their fiduciary duty, they must put the company's interests first, not their own, when making decisions.
Trustees are responsible for managing trusts where assets are held and handled for others. They must handle these assets carefully, fairly, and in line with the wishes of the person who set up the trust.
Legal guardians have a special responsibility when they're in charge of dependents who can't make decisions for themselves. Crucially, they have to act in the best interests of the people they're looking after.
Laywes must put their client's best interests first, keep their information private, and steer clear of situations where their interests might conflict with their duty to their clients.
These professionals advise clients on financial matters and must prioritise their clients' interests over their own, providing advice that benefits the client.
People in charge of handling a deceased person's estate (executors and administrators) have a fiduciary duty to manage the estate assets in a way that benefits the beneficiaries the most.
In a business partnership, partners have a responsibility to each other and the partnership. They must act fairly and with loyalty when making decisions and managing the partnership's affairs.
The main fiduciary duties include:
Whether they're handling finances, making business decisions, or managing an estate, fiduciaries are expected to follow these standards to protect the interests of those they serve.
If you're a company director, people expect you to be honest and always do what's best for the company. Alongside this, there are legal duties outlined in the Companies Act 2006.
They aim to encourage good governance and safeguard the interests of shareholders and people involved with the company.
| Duty | |
| Duty to act within powers | Directors are required to follow the company's rules, including its articles of association, and they should only use their powers for the reasons they were given them. This helps prevent directors from going beyond their responsibilities or misusing their authority. |
| Duty to promote the success of the company | Directors should make decisions that they believe, in good faith, will best promote the company's success for the benefit of all its members. This means thinking about the long-term effects of their choices, as well as considering the interests of employees, relationships with suppliers and customers, the community, and the environment. |
| Duty to exercise independent judgment | Directors must make decisions independently, without undue influence from others. This means they should not allow their decisions to be swayed by other parties if they conflict with the interests of the company. |
| Duty to exercise reasonable care, skill, and diligence | Directors are expected to perform at a level of competence that's reasonable for their role and to use any specialized skills or knowledge they have. They need to be well-informed and ready when making decisions or taking actions for the company. |
| Duty to avoid conflicts of interest | Directors must steer clear of any situations where they might have a personal interest that clashes, or could clash, with the interests of the company. This doesn't just mean financial conflicts; it includes any situation where their loyalties might be divided. |
| Duty not to accept benefits from third parties | Directors should refuse any perks or favors, including bribes, offered by third parties because of their position as a director or their actions/inactions in that role. Accepting these benefits could lead to biased decision-making. |
| Duty to declare interest in proposed transaction or arrangement | If a director has any involvement, whether direct or indirect, in a proposed deal or agreement with the company, they need to disclose the details of that involvement to the other directors. This openness helps handle possible conflicts of interest. |
These duties form the bedrock of a director's responsibilities and are upheld by the law to safeguard companies, their shareholders, and other stakeholders from wrongdoing or mismanagement.
Directors who neglect these duties could face legal repercussions, including being personally liable for any losses suffered by the company due to their actions.
A breach of fiduciary duties is when someone in a position of trust doesn't prioritise the best interests of those they're responsible for, or when they act in a way that goes against the expected standards of loyalty, care, and good faith.
When fiduciaries prioritise their benefit over the interests of those they're supposed to serve, they're not acting in the best interest of the beneficiaries. For example, if a company director uses confidential information to make personal profit from stock transactions.
Mismanagement of assets happens when fiduciaries are negligent or irresponsible with the assets they're in charge of, causing avoidable losses or harm. For instance, a trustee makes risky investments with trust funds that lead to substantial losses.
A conflict of interest arises when a fiduciary has activities or interests that clash with the duties owed to the beneficiary or principal. For instance, if an estate agent represents the buyer and the seller in the same deal without fully disclosing and getting consent from both parties.
Sharing sensitive information without permission or using it for personal advantage is a breach of fiduciary duty. For instance, lawyers sharing confidential client details without consent is a straightforward violation of this duty.
Fiduciaries must keep those they serve informed about matters that affect their interests. If they fail to do so, such as a financial advisor not informing a client about significant risks associated with an investment, it breaches their duty.
Accepting kickbacks, commissions, or any unauthorised benefits from a third party related to the fiduciary position without full disclosure and consent is a breach. This could involve a company director accepting bribes to influence decision-making.
Not following the terms outlined in a trust document, company bylaws, or failing to comply with applicable laws and regulations can also result in a breach. For example, a director acts beyond the boundaries of their authority as defined in the company's articles of association.
When fiduciary duties are breached, there are legal consequences that can address the violation, compensate for the harm caused, and prevent future breaches.
One common consequence is paying damages to the party harmed by the breach, meant to cover any financial losses suffered. For instance, if a company director personally profited from a harmful deal, they might need to return those profits.
Another remedy is recission, where a transaction made due to a breach of fiduciary duty is undone to restore the parties to their pre-breach state. For example, if a contract was entered into because a fiduciary failed to disclose a conflict of interest it may be rescinded.
An injunction may also be granted to stop harmful behaviour, especially if it's ongoing. Or, if assets were acquired through a breach, the court may impose a constructive trust, ensuring those assets are used or returned as legally expected.
Similarly, an account of profits requires the fiduciary to pass any profit made through the breach to the affected party.
In serious cases, the fiduciary may be removed from their position.
If a director breaches their fiduciary duties, shareholders and the company has various options to address the misconduct and recover any losses.
Understanding the legal complexities of a director's breach of fiduciary duties often requires expert advice from a corporate lawyer, as a breach can seriously harm an entire company.
Possible actions include:
A derivative action is a legal action against a director initiated on behalf of the company. This may be pursued if the company has not taken action due to control or influence by the offending director(s).
Any damages awarded through a derivative action typically go directly to the company.
Shareholders can bring a personal claim against a director if they suffer a loss distinct from the company's losses, such as cases involving misleading statements made directly to shareholders.
An injunction may be sought to halt ongoing or imminent breaches of fiduciary duties, such as preventing harmful transactions or stopping the director from continuing actions that breach their duties.
Under the Company Directors Disqualification Act 1986, a company, shareholders, or regulators can seek to disqualify a director from holding any directorships for a period if misconduct is found.
Shareholders can vote to remove a director through a majority vote, following the provisions outlined in the company's articles of association and the Companies Act 2006, as an immediate measure to stop further breaches.
A negotiated settlement between the director and the company or its shareholders may resolve a breach of fiduciary duties. This may involve the director stepping down, returning profits, or paying compensation without admitting wrongdoing, to avoid lengthy litigation.
Generally, you have six years to file a breach of fiduciary duties claim for most cases involving directors, whether they're executive or non-executive.
However, if the breach is proven to be fraudulent, there's no time limit because sometimes it takes a while to realise that a breach has happened, especially after a director has left their position.
When dealing with breaches of fiduciary duties, two common remedies are compensatory damages and accounts of profits, as we've discussed previously. Each of these remedies serves a distinct purpose and is grounded in different principles of justice.
Let's look at the differences.
The main aim of compensatory damages is to put an injured party back in the financial position they would have been in if the breach hadn't occurred.
Compensatory damages are determined by the actual losses suffered by a victim because of the breach of fiduciary duties. This calculation can include both direct losses, like monetary losses, and indirect losses, such as missed opportunities.
These damages apply when the breach results in measurable financial loss to the injured party. For example, if a fiduciary's negligence leads to a significant investment loss, the damages awarded would equal the amount lost due to the fiduciary's actions.
Account of profits, also known as disgorgement, is not to compensate the injured party but to prevent the fiduciary from benefiting from their breach.
An account of profits involves calculating the amount of profit the fiduciary gained from their wrongful actions. This calculation focuses only on the benefits obtained by the fiduciary, without considering any loss experienced by the injured party.
This remedy is used when a fiduciary has gained a financial advantage by breaching their duty, and there's a need to remove that benefit to discourage future misconduct.
Both of the above remedies can be pursued independently or together, depending on the circumstances of the breach and desired outcomes.
Equity and trusts in fiduciary law make sure that when someone is trusted to take care of someone's money, property, or interests, they do it properly. This stops powerful people from taking advantage of others who rely on them.
Equity is a set of rules developed in England to make sure everyone is treated fairly. It works alongside common law to make sure things are fair and just.
Trusts are where one person (the trustee) holds property or assets for the benefit of someone else (the beneficiary).
Trusts are important in fiduciary law because trustees legally own the assets but must manage them in the best interests of the beneficiaries, following the trust's rules.
Trust law makes sure trustees stick to their duty of care, loyalty, and fairness. If they don't, beneficiaries can take legal action to protect their rights.
One of the first hurdles in enforcing fiduciary duties is figuring out if there's even a fiduciary relationship to begin with. Not every trust or advice-based relationship counts as a fiduciary one. Often, it depends on the situation and type of relationship, which can be up for interpretation.
Proving that someone broke their fiduciary duty can also be difficult. It usually unovlves showing what the person meant to do or think when they breached their duty. Getting enough evidence to prove that they acted in their own interest instead of the other person's, or didn't act in the best way, can be a real headache and take up a lot of time and resources.
On top of this, even though the law offers remedies for breach of fiduciary duties, like paying damages or giving back profits, making these happen can be complicated, especially if you have to track down assets or profits.
Finally, suppose you're dealing with organisations and fiduciaries that operate in different countries. In that case, things get even trickier as each country has its laws, expectations, and ways of making sure people follow the rules. Handling fiduciary duties on a global scale means knowing about international law and sometimes getting legal help from different countries.
Here at Lawhive, our network of experienced corporate solicitors are ready to take on your case.
Whether you need support in taking legal action against a breach of fiduciary duties, or any other form of legal support, we are ready to take on your case.
Complete our quick and easy case assessment today to get started.
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