Fiduciary duty – it’s a big term and a big responsibility, and there are several responsibilities that company directors must uphold within it. That’s because trust, integrity and ethical conduct are the key principles of fiduciary duty.
Since you’ve been entrusted with the interests of others, such as your stakeholders, trustees or clients, understanding your fiduciary duty is incredibly important. Here are six types to understand.
Loyalty
Fiduciary duty is all about loyalty. This principle means that you’re obligated to prioritise others’ interests above your own. You must serve your stakeholders and clients, for example, above prioritising your own financial gain or personal advantage. It also means that you’ll need to be transparent about any conflicts of interest.
Duty of care
As a company director, you have a real duty of care. This demands that you must make well-reasoned and well-thought-out decisions when it comes to your company.
You’ll need to make sure your decisions are all well-informed and based on research. It’s also important to seek advice from others or appoint a London law firm to ensure that you’re in compliance.
Duty of disclosure
Transparency is extremely important. This means that you’ll need to disclose everything relevant to your beneficiaries or stakeholders and keep transparency at the forefront of your operations. For example, you must disclose any conflicts of interest or important financial information promptly.
Duty of confidentiality
Keeping sensitive information you’re entrusted with confidential is a vital part of your duty here. Privileged information must be kept privileged, and your beneficiaries’ best interests must be protected. Seeking advice from a London law firm can help you to balance this duty.
Duty of obedience
This means you’ll need to follow lawful instructions, agreements or governing documents and stick to any legal and contractual obligations you have to safeguard the rights of your trustees or other beneficiaries.
Duty of prudence
This means that sound judgment and prudent decision-making are critical. After all, you might be managing the assets or affairs of others, so you’ll need to assess risks and act with caution to protect their interests.
