Glossary

Directors' fiduciary duty

Directors' fiduciary duty is the legal obligation to act honestly, in good faith and in the company's best interests — a duty that shapes every funding and spending decision you take.

2 min read

Legal dutyOwed to the company

Good faithAct for the company, not yourself

Definition

Directors' fiduciary duty is the set of legal obligations, codified in the Companies Act 2006, requiring a director to act in good faith to promote the success of the company, exercise independent judgement and reasonable care, avoid conflicts of interest, and not profit personally at the company's expense.

In plain terms

In everyday terms: you run the company for the company, not for yourself. Decisions — including whether to borrow, how much, and on what terms — must serve the business, not your personal convenience.

Why it matters for your company

These duties bite hardest when a company is under financial strain, when the interests of creditors come into play. Sound funding decisions and honest record-keeping are part of discharging the duty. See directors' duties when borrowing.