Directors' Fiduciary Duties: The Relationship between Conflicts, Profits and Bona Fides'

Abstract

The duty to act bona fide in the interests of the company is essential to directors’ fiduciary loyalty and proscribes a number of forms of disloyalty. These include pursuit of self-interest, non-consideration of the company’s interests and conferral of benefits on third parties in the absence of attendant corporate benefit. With respect to the first of these aspects of loyalty the duty to act bona fide in the interests of the company overlaps with the duties to avoid conflicts and profits. However, the duty to act bona fide in the interests of the company has an independent operation as concerns the second and third forms of disloyalty. This article examines the relationship between the duty to act bona fide in the interests of the company and the duties to avoid conflicts and profits. In so doing, it demonstrates the overarching nature of the duty to act bona fide in the interests of the company and its fundamentality in terms of the fiduciary loyalty exacted of directors. These issues will be of direct relevance in any decision of the High Court in relation to the Bell Group of companies.

Keywords: Directors' duties, fiduciary duties