A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties. Typically, a fiduciary prudently takes care of money or other assets for another person. One party, for example, a corporate trust company or the trust department of a bank, acts in a fiduciary capacity to another party, who, for example, has entrusted funds to the fiduciary for safekeeping or investment. Likewise, financial advisers, financial planners, and asset managers, including managers of pension plans, endowments, and other tax-exempt assets, are considered fiduciaries under applicable statutes and laws. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance, and trust in another whose aid, advice, or protection is sought in some matter. In such a relation, good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts.
A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.
The business judgment rule is a case-law-derived doctrine in corporations law that courts defer to the business judgment of corporate executives. It is rooted in the principle that the "directors of a corporation... are clothed with [the] presumption, which the law accords to them, of being [motivated] in their conduct by a bona fide regard for the interests of the corporation whose affairs the stockholders have committed to their charge". The rule exists in some form in most common law countries, including the United States, Canada, England and Wales, and Australia.
The Delaware Supreme Court is the sole appellate court in the United States state of Delaware. Because Delaware is a popular haven for corporations, the Court has developed a worldwide reputation as a respected source of corporate law decisions, particularly in the area of mergers and acquisitions.
The duty of loyalty is often called the cardinal principal of fiduciary relationships, but is particularly strict in the law of trusts. In that context, the term refers to a trustee's duty to administer the trust solely in the interest of the beneficiaries, and following the terms of the trust. It generally prohibits a trustee from engaging in transactions that might involve self-dealing or even an appearance of conflict of interest. Furthermore, it requires a fiduciary to deal with transparency regarding material facts known to them in interactions with beneficiaries.
In corporate law in Commonwealth countries, an oppression remedy is a statutory right available to oppressed shareholders. It empowers the shareholders to bring an action against the corporation in which they own shares when the conduct of the company has an effect that is oppressive, unfairly prejudicial, or unfairly disregards the interests of a shareholder. It was introduced in response to Foss v Harbottle, which had held that where a company's actions were ratified by a majority of the shareholders, the courts will not generally interfere.
Teck Corp Ltd v Millar, (1972), 33 DLR (3d) 288 (BCSC) is an important Canadian corporate law decision on a corporate director's fiduciary duty in the context of a takeover bid. Justice Thomas R. Berger of the British Columbia Supreme Court held that a director may resist a hostile take-over so long as they are acting in good faith, and they have reasonable grounds to believe that the take-over will cause substantial harm to the interests of the shareholders collective. The case was viewed as a shift away from the standard set in the English case of Hogg v. Cramphorn Ltd. (1963). Recent scholarship has made the following observation:
[94] The decision in Teck v Millar, a seminal case on directors' duties, is consistent with the duty to protect shareholder interests from harm. Teck Corporation, a senior mining company, had acquired a majority of voting shares in Afton Mines Ltd., a junior mining company that owned an interest in a valuable copper deposit. In doing so, Teck sought to ensure procurement of a contract with Afton to develop the copper property. Before Teck could exercise its majority voting control to replace the board of directors with its own nominees, the Afton board signed a contract with another company that effectively ended Teck’s control position in Afton. In evaluating the evidence, Justice Berger was satisfied that Teck, the majority shareholder, "would cause substantial damage to the interests of Afton and its shareholders." In determining that the directors had not breached their fiduciary duty to the corporation, shareholder interests were distinguished from control interests. Drawing this distinction is key, "because once Teck's interest in acquiring control is put to one side, its interest, like that of the other shareholders, was in seeing Afton make the best deal available." Accordingly, the directors had made a decision that, despite affecting the control interests of the majority shareholder, had protected the shareholder interests of all shareholders from harm. This concern for the collective interests of shareholders, rather than strict adherence to majority rule, is consistent with the tripartite fiduciary duty.
Peoples Department Stores Inc v Wise, 2004 SCC 68 is a major Supreme Court of Canada decision on the scope of the fiduciary duty upon directors and officers of a corporation. When examining the duty of directors under section 122(1) of the Canada Business Corporations Act ("CBCA"), the Court held that there is a distinction between the interests of the corporation and those of the stakeholders and creditors.
Guth v. Loft Inc, 5 A.2d 503, 23 Del. Ch. 255 is a Delaware corporation law case, important for United States corporate law, on corporate opportunities and the duty of loyalty. It deviated from the year 1726 rule laid down in Keech v Sandford that a fiduciary should leave open no possibility of conflict of interest between his private dealings and the job he is entrusted to do.
Directors' duties are a series of statutory, common law and equitable obligations owed primarily by members of the board of directors to the corporation that employs them. It is a central part of corporate law and corporate governance. Directors' duties are analogous to duties owed by trustees to beneficiaries, and by agents to principals.
United States corporate law regulates the governance, finance and power of corporations in US law. Every state and territory has its own basic corporate code, while federal law creates minimum standards for trade in company shares and governance rights, found mostly in the Securities Act of 1933 and the Securities and Exchange Act of 1934, as amended by laws like the Sarbanes–Oxley Act of 2002 and the Dodd–Frank Wall Street Reform and Consumer Protection Act. The US Constitution was interpreted by the US Supreme Court to allow corporations to incorporate in the state of their choice, regardless of where their headquarters are. Over the 20th century, most major corporations incorporated under the Delaware General Corporation Law, which offered lower corporate taxes, fewer shareholder rights against directors, and developed a specialized court and legal profession. Nevada has attempted to do the same. Twenty-four states follow the Model Business Corporation Act, while New York and California are important due to their size.
Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173, was a landmark decision of the Delaware Supreme Court on hostile takeovers.
Shareholder oppression occurs when the majority shareholders in a corporation take action that unfairly prejudices the minority. It most commonly occurs in non-publicly traded companies, because the lack of a public market for shares leaves minority shareholders particularly vulnerable, since minority shareholders cannot escape mistreatment by selling their stock and exiting the corporation. The majority shareholders may harm the economic interests of the minority by refusing to declare dividends or attempting a squeezeout. The majority may physically lock the minority out of the corporate premises and even deny the minority the right to inspect corporate records and books, making it necessary for the minority to sue every time it wants to look at them. An important concept in law pertaining to shareholder oppression is the "reasonable expectations" of the minority shareholder. The "fair dealing" standard is also sometimes used by courts.
Pilmer v Duke Group Ltd is an Australian company law case concerning the adequacy of consideration paid for shares, as well as on the questions of duty of care and fiduciary duty owed by experts retained in such matters.
Directors' duties in the United Kingdom bind anybody who is formally appointed to the board of directors of a UK company.
Commercial insolvency in Canada has options and procedures that are distinct from those available in consumer insolvency proceedings. It is governed by the following statutes:
Sun Indalex Finance, LLC v United Steelworkers, 2013 SCC 6, arising from the Ontario courts as Re Indalex Limited, is a decision of the Supreme Court of Canada that deals with the question of priorities of claims in proceedings under the Companies' Creditors Arrangement Act, and how they intersect with the fiduciary duties employers have as administrators of pension plans.
Canadian corporate law concerns the operation of corporations in Canada, which can be established under either federal or provincial authority.
In the United States, a benefit corporation or B corporation is a type of for-profit corporate entity, authorized by 36 U.S. states and the District of Columbia, that includes positive impact on society, workers, the community and the environment in addition to profit as its legally defined goals, in that the definition of "best interest of the corporation" is specified to include those impacts. Laws concerning conventional corporations typically do not specify the definition of "best interest of the corporation", which has led to the interpretation that increasing shareholder value is the only overarching or compelling interest of a corporation. Benefit corporations may not differ much from traditional C corporations. A C corporation may change to a B corporation merely by stating in its approved corporate bylaws that it is a benefit corporation; however in certain jurisdictions, the terms "public benefit corporation" or "PBC" are also required to be in the legal name of B corporations.
Wilson v Alharayeri is a leading case of the Supreme Court of Canada which significantly extends the application of the oppression remedy under the Canada Business Corporations Act to include non-corporate parties.
The oppression remedy in Canadian corporate law is a powerful tool available in Canadian courts, unique in breadth and scope compared to other examples of the oppression remedy found elsewhere in the world.
