Peskin v Anderson [2001] 1 BCLC 372

Facts

  • The case was heard in the High Court of Justice, Chancery Division.
  • The main dispute concerned the duties of company directors when handling transactions involving shares, specifically whether directors are obliged to disclose information affecting share value when negotiating privately with individual shareholders.
  • Directors purchased shares from shareholders and did not disclose certain information that could affect the share value.
  • Shareholders contended that directors owed a fiduciary duty to them individually to disclose material information in such private transactions.

Issues

  1. Whether company directors owe a general fiduciary duty to individual shareholders during private share transactions.
  2. Whether directors are required to disclose information affecting share value to individual shareholders in the context of private transactions.
  3. Whether any exceptions apply that impose a fiduciary duty on directors towards individual shareholders in such circumstances.

Decision

  • The court held that directors do not generally owe fiduciary duties to individual shareholders in share dealings; their duties are owed to the company as a whole.
  • It was confirmed that there is no general duty for directors to disclose information to shareholders regarding possible changes in share value when purchasing shares from them.
  • The court recognized narrow exceptions where a special relationship of trust or agency exists between director and shareholder, but emphasized these exceptions rarely apply to typical share transactions.

Legal Principles

  • The principal fiduciary duty of directors is owed to the company, not to individual shareholders.
  • The case reaffirms the rule from Percival v Wright [1902] 2 Ch 421 confirming the absence of a fiduciary relationship in standard share dealings.
  • The separate legal personality of the company, as established in Salomon v A Salomon & Co Ltd [1897] AC 22, requires directors to prioritize the company over shareholder interests.
  • Exceptions to the general rule may arise where directors act as agents for shareholders or provide advice that is relied upon to a shareholder’s detriment, but such circumstances are exceptional.

Conclusion

Peskin v Anderson confirms that directors’ fiduciary duties are owed to the company rather than to individual shareholders during share transactions. There is no general requirement for directors to disclose information about share value in such dealings, barring rare situations of special trust or agency, thus upholding corporate governance principles and emphasizing shareholder responsibility for self-protection.

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