Director’s Fiduciary Duties

Running a small business is no walk in the park. You wear many hats, juggle countless tasks, and constantly make decisions that impact your company’s future. One crucial aspect of being a director of a small business is understanding your fiduciary duties. These duties create a special relationship of trust and loyalty between you, the company, and its stakeholders.

At Blackstone Solicitors, we understand the pressures small business owners face. This article aims to shed some light on directors’ fiduciary duties in a clear and concise way, so you can navigate your role with confidence.

Free Initial Telephone Discussion

For a free initial discussion with a member of our New Enquiries Team, get in touch with us today. We are experienced in dealing with all the legal aspects of a director’s responsibilities, and once instructed, we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you are on the best possible footing from the start and also avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.

What are Fiduciary Duties?

Think of fiduciary duties as the golden rules that guide your actions as a director. They ensure you act in the best interests of the company, not your own personal gain. These duties are based on the principle that directors hold a position of trust, and with that trust comes responsibility.

There’s no single, definitive list of fiduciary duties, but some core principles apply in most cases. Here, we’ll explore the most common ones:

• Duty to Act in the Best Interests of the Company: This is the heart of fiduciary duties. Your decisions should be made with the company’s success as the primary goal. This may involve considering the interests of shareholders, employees, creditors, and even the wider community the company operates in.
• Duty to Act Within Your Powers: The company’s constitution and relevant legislation define the limits of your authority as a director. You must ensure your actions fall within those boundaries. For instance, exceeding your spending limit or entering a contract beyond your scope of responsibility would be a breach of this duty.
• Duty to Exercise Independent Judgement: While seeking advice is crucial, ultimately, decisions rest with the board of directors. You should avoid being unduly influenced by a controlling shareholder or another director with a personal agenda.
• Duty of Care, Skill and Diligence: This duty translates to acting with reasonable prudence and good judgement. You’re expected to possess the skills and knowledge necessary to fulfil your role effectively. This might involve attending relevant training, keeping yourself updated on industry trends, and making informed decisions based on all available information.
• Duty to Avoid Conflicts of Interest: Situations where your personal interests clash with the company’s interests can be tricky. You should disclose any potential conflicts to the board and avoid putting yourself in a position where you might benefit personally from a decision that could harm the company.

Practical Tips for Fulfilling Your Fiduciary Duties

Now that we’ve covered the core principles, let’s explore some practical steps you can take to ensure you’re fulfilling your fiduciary duties effectively:

• Maintain Good Corporate Governance: This includes holding regular board meetings, keeping clear and accurate records of decisions taken, and implementing robust financial reporting procedures.
• Seek Professional Advice When Needed: Don’t be afraid to seek legal or financial advice when faced with complex situations. Blackstone Solicitors can assist you in navigating these situations.
• Be Transparent and Open: Maintain open communication with shareholders and other stakeholders. This fosters trust and helps ensure everyone is on the same page.
• Act in Good Faith: Always strive to make decisions that are honest, ethical, and in the best interests of the company, even when faced with difficult choices.
• Stay Up-to-Date: The legal landscape can change, so stay informed about any updates to relevant legislation or case law that might impact your duties as a director.

Consequences of Breaching Fiduciary Duties

As a director, breaching your fiduciary duties can have serious consequences. These may include:

• Personal Liability: If your actions cause the company to suffer financial losses, you may be held personally liable.
• Disqualification: A court may disqualify you from acting as a director for a specific period.
• Reputational Damage: A breach of fiduciary duty can damage your reputation and make it difficult to secure future directorships.

Blackstone Solicitors: Your Partner in Fulfilling Your Fiduciary Duties

At Blackstone Solicitors, we understand the challenges faced by small business owners. Our experienced team can provide you with clear and practical guidance on your fiduciary duties and how best to fulfil them. Whether you need assistance with drafting board resolutions, navigating a potential conflict of interest, or simply seeking reassurance about a specific decision, we’re here to help.

How we can help

We have a proven track record of helping clients deal with the legal implications of the responsibilities of a director. We will guide you diligently and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting. You can read more about the range of corporate services we offer by clicking here: https://blackstonesolicitorsltd.co.uk/corporate-legal-services/

How to Contact Our Corporate Solicitors

It is important for you to be well informed about the issues and possible implications of fiduciary duties. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.

To speak to our Corporate solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.

Authored by Ben Posted in Blog, News Tagged as

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