Businesses generally need trustworthy people in positions of authority. In some cases, those helping to run organizations have a fiduciary duty to it. Whenever making business decisions, they should think about what might benefit the company rather than themselves as individuals.
A breach of that duty could lead to litigation to remove a person from their position of authority or hold them accountable for the damages they cause. Who might have a fiduciary duty to a company?
1. Executives and other leaders
Those in a position of authority, including financial officers and executives, generally have a fiduciary duty to the business they help run. They are in a position of trust, which they should diligently attempt to uphold to the best of their ability.
2. Partners and majority shareholders
Business partners who jointly own a company with others have a duty to their co-owners and the organization itself. Majority shareholders who have retained or acquired a controlling interest in a publicly traded organization also have a fiduciary duty to the organization.
3. Trustees or agents
The owners of businesses and professional practices sometimes create trusts to manage the company and appoint a trustee to oversee operations. Other times, business leaders may rely on contracted agents to address specific organizational needs, such as the investment decisions for the company’s pension fund. Trustees, agents and others officially tasked with assisting in business operations may have a fiduciary duty to the company that they should uphold to the best of their abilities.
If a breach of fiduciary duty occurs, the parties affected by that breach may have grounds to file a business lawsuit. Initiating business litigation can remove untrustworthy people from their positions or compensate the company for the impact of their misconduct.