Breach of fiduciary duty – shareholder disputes

In a business relationship involving directors, partners or joint venture partners, in a charitable organisation involving trustees or for example in the capacity of an executor of a will, if such a person conducts themselves in a way that is not in the best interests of the organisation (and its’ owners) or individuals they are employed by, or their fellow shareholders and this conduct causes loss, the law provides a number of remedies.

A party affected by person who is not acting in the best interests of the organisation they work for or represent may be in breach of their statutory and common law fiduciary duties.

These, for example, include a duty to act in the best interests of the organisation for which they work, to not put themselves in a better position than that of the organisation they work for or accept benefits from third parties arising out of their role.  

In certain circumstances such breach of fiduciary duties can also be by one shareholder of a business resulting in what is commonly referred to as ‘unfair prejudice’ suffered by the other shareholders.  

Tenet have seen a number of these types of cases where one party will allege that another has acted dishonestly in their role for their own benefit. 

One common example is in setting up or being connected to a competing organisation and not having agreed that with fellow directors or shareholders.

Another example is where a senior executive of an organisation is deceiving others for personal gain, for example, diverting business opportunities for their own benefit.

We are often instructed in shareholder disputes concerning breach of fiduciary duties as well as in cases of employee fraud concerning senior executives acting in a way inconsistent with their duties.

At Tenet, we can help navigate the early stages of such a dispute to try and help resolve the issues knowing that such cases can otherwise lead for example to a very costly ‘business divorce’.

If a dispute does escalate, we have the experience to guide our clients through the process having resolved several such claims successfully, typically for clients alleging the wrongdoing.

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