The American Misconstruction of Director Fiduciary Accountability

Abstract

Modern English and American corporate law was broadly fashioned in the nineteenth century. Oddly however, the courts of those two closely linked jurisdictions developed profoundly opposed views on a most basic matter. After some initial conflict in the cases, the English settled on the principle that directors are status fiduciaries only to their corporation. The Americans, with a comparable initial conflict in their cases, instead eventually settled on the notion that directors are status fiduciaries to shareholders. I track how that difference developed through the course of the nineteenth century. I also trace how fairness wrongly became an element of the American duty. Director fiduciary duty, director duty to shareholders, corporate personality, joint stock company, centralised management, entire fairness, director duty to creditors