A fiduciary duty is a legal obligation owed by a person in a position of trust (the fiduciary) to act in the interests of another (the beneficiary or principal), rather than in the fiduciary's own interest.
Who Owes Fiduciary Duties
Classic fiduciary relationships include trustee and beneficiary, company director and company, agent and principal, partner and partner, and lawyer and client. Courts may also recognise a fiduciary relationship wherever one person has undertaken to act for another in circumstances giving rise to trust and confidence.
Core Obligations
The duty of loyalty requires the fiduciary to avoid conflicts between duty and interest, not to make unauthorised profits from the position, and not to act for a third party against the principal. The duty of care requires the fiduciary to act with the skill and diligence that the position demands. Fiduciaries must also act in good faith and for proper purposes.
Directors in Indonesia
Article 97(2) of Law No. 40 of 2007 on Limited Liability Companies requires directors to manage the company in good faith and with full responsibility. A director who is at fault or negligent in performing these duties is personally liable for the company's loss (Article 97(3)), and shareholders holding at least one tenth of the voting shares may sue on the company's behalf (Article 97(6)).
Remedies
A breach of fiduciary duty may lead to compensation, an account of profits, rescission of a transaction tainted by conflict, or the imposition of a constructive trust over property obtained in breach.