Decision On Fiduciary Duties

The High Court of England and Wales has issued an important judgment concerning the fiduciary duties of directors. Sharp v Blank concerned a claim by 5800 claimants against the chairman and four out of the 13 directors of Lloyds Bank at the time for damages of £385 million arising out of decisions they made in relation to the takeover by Lloyds of HBOS. The acquisition had been approved at an EGM with 96% in favour of the unanimous board recommendation to proceed with the acquisition. The claimants' case was that the board should not have recommended the acquisition because it implemented a dangerous and value destroying strategy which involved unacceptably risky decisions.

They also argued that the board should have provided better quality information to shareholders in relation to the transaction. The court was not...