Title: Fiduciary Duties of Controlling Shareholders: A Comparative View
Abstract: Both directors and controlling shareholders are vested with the power to exercise control over the property of others. While the common law has recognized strict fiduciary duties binding the directors of a company,' it has refused to impose a general fiduciary duty on controlling shareholders. The voting power of the majority shareholders has been restricted, on the other hand, by the common law in two categories of cases: where a resolution relates to the alteration of the company's memorandum and articles of association and where a resolution is tainted by fraud on the minority. Israeli corporate law, though generally based on English company law,2 has recently departed from the English view with regard to the fiduciary duties of controlling shareholders. English law denies the imposition of a fiduciary duty on controlling shareholders to minority shareholders. Israeli law, however, has veered toward the American view, which favours imposing a fiduciary duty on controlling shareholders. The purpose of this article is to trace the development of Israeli law in this field, comparing it with English and American law. Further, it shall examine the extent to which a general fiduciary duty should be recognized on the part of controlling shareholders in England and in Israel. This examination will explore the underlying rationale for the recognition of a fiduciary duty in this field. By focusing on the relevant statutory provisions of England and Israel, this article will shed light on the attitudes of these countries' legislatures towards a fi-
Publication Year: 1991
Publication Date: 1991-01-01
Language: en
Type: article
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Cited By Count: 6
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