ABSTRACT
The first question that needs to be considered in relation to the duties of directors is the question of to whom those duties are owed. The traditional view in British company law is that directors owe their duties to the providers of capital, that is to say, to the shareholders. This duty is owed to the shareholders as a body and not to individual shareholders. Thus, in Percival v Wright (1902), where certain shareholders approached the directors asking them to purchase their shares at a time when secret takeover negotiations were going on, the directors failed to mention this to the shareholders. In subsequent litigation, it was held that the directors were not in breach of duty to the shareholders. The directors owed their duty to the shareholders as a body and the court took the view that premature disclosure of the takeover negotiations would have been detrimental to the shareholders. The position is different if the approach is made by the directors to the shareholders. In such a situation the directors constitute themselves as fiduciaries vis à vis the shareholders: see Briess v Woolley (1954); Allen v Hyatt (1914). The traditional view was recently confirmed in Stein v Blake (1998); see para 14.1.
