In short: Who are fiduciaries and What responsibilities do they have ?
Individuals who hold
positions of trust will generally be fiduciaries. This includes directors,
senior managers within businesses and partners in professional partnerships. If
such individuals breach their fiduciary duties, they risk having their
remuneration (potentially including profit share) forfeited. This is in
addition to having to pay damages.
In other words, a fiduciary is simply someone who undertakes
to act on another’s behalf in circumstances giving rise to a relationship of
trust and confidence. Examples of fiduciary relationships include those between
trustees and the beneficiaries of a trust, and between agents and their
principals. Company directors owe fiduciary duties to their companies, as can
ordinary employees entrusted with a particular role of trust.
However, the position is different for partnership (LLP)
members. While LLP members will not ordinarily owe any fiduciary duties to
other members, they will usually owe fiduciary duties to the LLP itself. The
extent of the duties in any particular case will depend upon that member’s
precise rights and obligations, but any member who has assumed a position of
trust and responsibility over the affairs and property of the LLP will owe
extensive fiduciary obligations. Thereby, such
duties may be relevant in a case when a member is holding a senior position.
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