Extrapolating the Fiduciary Principle and Conflict of Interest: A Special Prescription on Corporate Opportunity and Related Party Transactions (RPTs)

Abstract

The compliance of fiduciary principle in corporate sector is requisite for the effective operationalization of corporate entity. The fiduciary principle is rooted from the law of trust and its consideration in a corporate body regards to the best corporate practices. The contravention of this principle by the directors of a corporate body mostly occurs due to the account of clash of interest where personal interest supersedes to the corporate interest and leads to the violation of ethical standards. This paper provides an inquisitorial approach into fiduciary duties of a corporate director and the account of its contravention by promoting his personal benefits instead of company’s benefits coupled with consequential implications for a corporate body. It specifically renders the two circumstances of conflict of interest namely corporate opportunity and related party transactions (RPTs) and purveys a deeper comprehension to this account while considering famous case laws. This article is culminated to the understanding of fiduciary duties of a director, conflict of interest in cases of corporate opportunity and RPTs and its management by protecting the corporate interest. The pivot argumentation for this paper revolves around the importance of prioritizing corporate interest by setting aside the personal interest in corporate opportunity and RPTs and its realization for the efficient operationalization of corporate body. In last this paper imports a qualitative methodology to address the concerns of conflict of interest and offers certain recommendations through literature conducive for the elimination of clash of interest in case of corporate opportunity and RPTs.