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The Duty of Directors to Act Bona Fide in the Interests of the Company: A Positive Fiduciary Duty? Australia and the UK Compared

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Abstract:

The fiduciary classification of the fundamental duty of directors to act bona fide in the interests of the company is in doubt in Australia due to apparent recent narrowing of the fiduciary principle by the High Court and many commentators. By contrast, the fiduciary characterisation and positive operation of the duty in the UK are clearer. This article outlines the differences between the operation of the duty in each jurisdiction and the reasons for these differences. It explores the significance of fiduciary classification (particularly in terms of loyalty and the imposition of liability based on the rule in Barnes v Addy) and the distinctive use of this duty to require directors to consider the interests of creditors. The duty to act bona fide in the interests of the company should continue to be classed as a fiduciary duty. In this respect the position in the UK is to be preferred.

Document Type: Research Article

DOI: http://dx.doi.org/10.5235/147359711795344181

Publication date: April 1, 2011

More about this publication?
  • The Journal of Corporate Law Studies provides a forum for scholarship on corporate, securities and financial law broadly construed. Thus the Journal publishes articles on subjects as diverse as insolvency and the commercial conflict of laws, in addition to mainstream topics such as directors' duties and financial regulation. The Journal also embraces interdisciplinary work and work in cognate fields.Articles published in the Journal are subject to rigorous peer review. Shorter articles and notes are refereed where appropriate.
    The Journal is published twice a year in June and October.
    The journal will be of interest to academics and practitioners specialising in any of the subjects covered, and also to those with an interest in the strategic direction of the law and the influences which affect it - thus regulators, law and policy-makers, and the judiciary.
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