Definition of Fiduciary Duty

What is meant by "fiduciary duty"? What is the definition of the term "fiduciary duty"?

You have likely run across the term "fiduciary duty" when reading up about a takeover or a potential takeover or a lawsuit regarding a potential takeover.

You probably saw the term "fiduciary duty" included in a phrase such as this:

"XYZ had a fiduciary duty to the shareholders in his company".

If you own shares in a company, then you have a "fiduciary relation" with the people that run that company.

You are placing your trust in the people that run the company, and, in return, they promise to act ethically and in the best interests of the shareholders of the company. The people that run the company are expected to put the interests of the company ahead of their own. They are managing YOUR money, and thus a special bond is born.

According to Wikipedia.org..

"A fiduciary duty is a legal or ethical relationship of confidence or trust regarding the management of money or property between two or more parties, most commonly a fiduciary and a principal.."

So, a company officer (for instance) has a fiduciary duty to not put their own interests ahead of those of the shareholders.


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