Fiduciary Duties of Former Non-Executive Directors

It has been reported that Sir Paul Judge, a former director at mining company ENRC, is suing the firm over alleged defamation regarding a breach of his fiduciary duties after ENRC issued a press release in July 2013 stating Sir Paul leaked confidential information.

So what are the fiduciary duties of a former non-executive director in relation to confidential information? A non-executive director has the same duties and responsibilities as a full time executive director. As such the non-executive director will be responsible in the same way as any other director for the decisions and powers taken by the board. This duty of confidentiality exists under common law, contract and statute

Where it is clear a breach of the duty of confidentiality has taken place as a result of misuse of confidential information, then there are actions a business can take:

  • A serving director might be asked to give undertakings to comply with contractual promises going forward.
  • If that is not appropriate (i.e. somebody who is no longer a director but breached the duty while they were a serving director) the company might seek damages.
  • The starting point for a measure of damages is any financial losses suffered by the company as a result of the breach.
  • The misuse by a director of confidential information may enable the company to argue that it has suffered damage to its goodwill and reputation and that consequently its business has been or will be affected financially.

Oliver Kew

Published on 17/01/2014

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