Welcome!

To all those reading this I am David Gibbs; PhD candidate from the University of East Anglia and former associate tutor. I am also a Lecturer in Company and Commercial Law at the University of Hertfordshire.

I created this blog as a general out-let of ideas for my research, as well as keeping those interested up-to-date on my research and general interests.

My research centres on directors' duties and company law. I am mainly looking at interpretation and practicality of directors' duties in the 21st Century. The main duty I am looking at is s175 (duty to avoid conflict).

The research also involves looking at key theories surrounding company development such as those concerning dispersed ownership, remedies available to the company such as derivative claims, and also empirical research based on the above.

My supervisors are Prof. Mathias Siems, Prof. Duncan Sheehan, Dr. Sara Connolly and Dr. Rob Heywood

All opinions of any existing or future blogpost are my own. They do not necessarily represent the views of any of my associated institutions.


Monday, 31 March 2014

Newcastle PGR Conference



This week (3rd and 4th) I shall be attending and presenting at Newcastle University Law School for their annual PGR Conference on 'The challenges for legal thought in contemporary society'. I will be presenting what is a development from my PhD on fiduciary duties of directors to identify the scope of the duty. This will detail when the director is required to be loyal to the company's interests by identifying the purpose and function of imposing loyalty on a director. The conference programme can be found here.

Thursday, 20 March 2014

Eckerle & Ors v Wickeder Westfalenstahl GmbH [2013] EWHC 68

Introduction
The decision in Eckerle is of some significance to company law. It concerned the ability of a beneficiary in an investment chain being able to enforce rights within the company as a member within the definition of the Companies Act 2006, s. 112. The decision reached by Norris J caused him to remark that he had not reached 'a particularly uncomfortable conclusion, but reaching any other conclusion would involve an impermissible form of judicial legislation'. This has lead to debate about the role of investment intermediaries and their legal obligations with recent discussion on how if at all the law should be reformed to allow the ultimate beneficiary in an investment chain to exercise rights against issuers of securities.

Here I will give a brief summary of the case and discussion.

Facts and judgment
DNick Holding plc, registered in England but operated in Germany, was owned by Wickeder GmbH who acquired 75.005% of the company's shares (albeit through an intermediary, the significance of which is detailed below) giving it enough control to pass a special resolution (75%), which is required to make certain changes within the company.

The board of DNick proposed to cancel its shares and re-register as a private limited company (Ltd) for a public limited company (plc). This caused a drop in value of DNick's shares. A meeting was called and a special resolution was passed to re-register with Wickeder using its 75.005% ownership to secure it. The meeting was attended by shareholders (or their proxies) representing 83.71% of the vote.

Eckerle and Ors were claimed (claimed being the operative word) to be minority shareholders owning 6% of the issued shares. They commenced proceedings against Wickeder under section 98 of the Companies Act 2006 to have the resolution cancelled on the basis that they had standing to do so.

The Act under section 97 provides a company may re-register as a private company provided the conditions are met in this section and no application under section 98 has been made to cancel the resolution to re-register. Section 98 itself provides who may make such an application for cancellation and this includes: (a) the holders of not less in the aggregate than 5% in nominal value of the company's issued share capital; (b) ...; (c) ...; but (2) not by a person consented to or voted in favour of the resolution. Under subsection (3) the court may then make an order either cancelling or confirming the resolution.

Wickeder sought to strike this claim out, inter alia (see para [11]), on the basis there was no reasonable grounds on which the claim could be brought; or alternatively for summary judgment. The decision focused on the considerations set out for summary judgment and the dispute about the construction of the provisions in section 98 (see para [12]).

The key/common facts were laid out in para [14]. An important fact to note was that according to the share register DNick only had two registered shareholders who held the 5,671,318 issued ordinary shares. Dr Platt (CEO of Wickeder) held 1 share and the Bank of New York Depository (nominees) Ltd (BNY) the remainder. BNY acted as a depository of the issued shares, holding those shares on trust for account holders with Clearstream according to the account holder's respective holdings in Clearstream Interests (CI). Clearsteam was the settlement division of Desutsche Borse. Through Desutsche Borse trades on the relevant exchange between Clearstream account holders are transacted electronically. These account holders could not be individuals and could only be banks or financial institutions. What was traded on Desutsche Borse was the underlying ownership rights in DNick shares the CIs but not shares in DNick themselves. The trades were between Clearstream account holders, concluded on behalf of the customers of those account holders, who could be described as the end investor or ultimate beneficiary. Thus Eckerle and Ors plead to have 7.2% in the nominal value of the issued share capital but, in truth, they only have the ultimate economic interest in those securities which amounts to a specified percentage of the shares held by BNY on trust for Clearstream account holders whose customers Eckerle and Ors are.

As you can see, the claimants were far removed from the being the owners of the shares and simply held the economic interest in those securities. BNY held the shares, who held them on trust for Clearstream account holders whose customers the claimants are. They were 3 times removed in summary. This means when dividends are paid they are paid to BNY. Although the Articles did allow direct payment to Clearstream account holders who would ultimately account to its customers.

According to the facts set out at para [14] the company's articles provided that 'each person who is a CI holder at the relevant CI record date' can either direct the registered holder of the share how to exercise the vote attaching to the underlying share or to appoint a proxy to do so (who might be the end investor).

Thus it became important to identify who was the CI holder as it would give them the right to direct a vote or appoint a proxy. A CI holder was interpreted, according to the Articles, to mean 'the holder of [an interest in the shares in the capital of the company traded and settled through Clearsteam]'. They are then identified by the electronic register of CI holders. The only interests traded and settled through Clearstream are the interests of Clearstram account holders which were the banks and/or financial institutions. Only they fitted this description and so the right to appoint or direct would fall to them, not the account holders' customers. The Articles under Article 10 continued that DNick did not recognise beneficial interests and made clear they would not recognise any right except an absolute right to the 'entirety thereof in the registered holder'.

All of this ultimately lead to an initial observation that there is potentially a 'serious loophole in the protection afforded to minority shareholders'.

It was submitted for the claimants that, essentially section 98 should be interpreted widely and construe the provision as to who were holders as those who were shareholders in all but name and not simply those registered as holding the shares. At para [15] it was argued that: (1) section 98 should be construed with regard to the deliberate use of the terms 'holder' and 'person' instead of member; (2) alternatively the provision in section 145 should be approach purposively to enable the claimants to exercise rights otherwise vested in a member to enable that person to protect the economic value of their shares; (3) alternatively the common treatment of the holder of the ultimate economic interest as if he were a shareholder should mean in the present case that the prospects of the claimants showing that they were entitled to the relief they claimed cannot be dismissed as fanciful (required to allow the claim to proceed under the Civil Procedure Rules)

The first point was addressed that member or shareholder is one and only one (para [18]) citing at para [17] National Westminster Bank plc v Inland Revenue Commissioners [1995] 1 A.C. 119, 126. Therefore the claim that the term 'holder' should be interpreted widely was seen as needing an extremely strong reason to do so so as to depart from the orthodox understanding. Norris J continued at para [19] that the whole basis of the 2006 Act proceeds on the this basis as to the definition of a member, which is found in section 112 and concluded that the person who is registered as a member is rightfully deemed the holder of said shares. Thus, the definition does not include the person holding the ultimate economic interest. Norris J, at para [20] did not believe the specific use of the term 'holder' in section 98 should mean the court should look to the holder of the economic interest on the basis the other two subsections in section 98 referred to 'member'. He continued that under section 98 the court can only adjourn to have the shares purchased from the dissenting members. Therefore no relief could be granted to the holder of the ultimate economic interest.

Norris J continued in his reasoning that section 260 makes provisions in respect of rights directly enforceable by non-members, under section 260(5)(c) which states a member includes a person who is not a member but has been transferred shares in the company or has had them transmitted by operation of law. It was stated in Enviroco Ltd v Farstad Supply [2011] UKSC 16 at [37]-[38] that the term member is defined by section 112 and is a fundamental principle of company law and can only be departed from where expression provision allows it. Without such a principle company law would be unworkable.

Therefore section 98 does not apply to anyone expect those who are on the register.

However, Norris J continued to express reasons why summary judgment would not be given in favour of the claimants. He cites the Explanatory Notes for the 2006 Act at paragraph 210 and notes nobody believes on a true construction that section 98 extends to anybody beyond those members on the register.

Norris J further adds that the provisions in the Articles did not protect the claimants. These only provided that account holders i.e. Clearstream account holders (the banks or financial institutions) could direct BNY on how to vote or require BNY to appoint the account holder as proxy. Therefore the account holders could direct BNY as a member how to exercise its votes. As a result no rights are conferred upon the customers of the account holders under the articles.

To continue Norris J cites section 145 that provides anything required or authorised to be done by or in relation to the member shall be done or may instead be done by or in relation to the nominated person... as if he were a member of the company. This generally allows the nominated person to act is if they were a member of the company. However, section 145(4) adds that the section, nor does the Articles, 'confer rights enforceable against the company by anyone other than the member'. Norris J states at para [26] that these provisions were introduced due to investors increasingly holding their shares through intermediaries. Norris J elaborates at para [26], citing Hannigan, that company law 'demands a mechanism whereby the indirect investor can engage with, and be recognised, by the company'. But Hannigan admits such a mechanism, whilst ideal, would, in practice, be difficult. Hannigan, as cited by Norris J, states section 145 is a modest step forward in achieving this but is not a radical departure from recognising the member as the one who is registered as such.

Therefore section 145(4) does not confer enforceable rights on anyone expect for the registered shareholders, which in this case is Dr Platt and BNY. Therefore failure to recognise the nominated person or afford them the same treatment as if they were a member, does not give enforceable rights to that nominated person. The only person who can enforce is the registered shareholder. At para [27] Norris J, citing Buckley, gave the example of failing to notify a nominated individual of a meeting. Whilst the company has to recognise that nomination and inform them accordingly, failure to do so would only allow the registered shareholder to challenge that failure.

Norris J concluded that from the submissions presented none lead to the conclusion that the account holders, let alone the claimants could enforce section 98. He states at para [29] 'These passages simply mean that the statutory rights that are directly exercisable by the nominated person are those which enable the right conferred and transfered by the articles to be effectively transferred'. He notes that this is why section 145(2) operates 'so far as is necessary to give effect [to the provision in the company's articles enabling a member to nominate another person as entitled to enjoy or exercise ... any specified rights of the member in relation to the company]'. Norris J stated that this 'does not mean that if the effective exercise of the transferred right produces a result that is not to the taste of the nominated person then the nominated person can, in order to bring about his desired outcome, himself use any of the provisions of the 2006 Act available to the transferring member'. As a result Norris J concluded the claimants were neither holders within a true construction of section 98, nor did section 145 enable them to bring a claim. Norris J also noted that there was no expectation beyond what the Articles said that would allow the ultimate beneficiaries to enforce said rights on the basis of the well known dicta in Re Astec (BSR) plc [1999] BCC 59, 87 that made clear that such expectations have no place in public listed companies and the public dealing in the market proceed on the basis of what is in the Articles.

Finally, Norris J suggested that it could add BNY as a party to the proceedings but deemed this would not be capable as BNY was a person who had voted in favour of the resolution to re-register the company as private and could not make an application under section 98 which bars those who voted in favour from doing so. This, in itself, was seen as problematic at para [32]. If the holder of the legal interest in the share has been instructed to vote in favour of the resolution it will make them incapable of  commencing proceedings for any ultimate beneficiary dissenting from the resolution.

All of this lead to Norris' J uncomfortable conclusion that the ultimate beneficiary would be deprived of protection, which those who formulated the 2006 Act thought should be extended to.

Summary
In summary, the claimants were not members. They could not apply under section 98 to have the re-registration cancelled, nor could they apply under section 145 to enforce rights as nominees because they were not nominees and by any means this section does not confer enforcement rights on nominees, those are vested in the shareholders only. As well BNY could not commence proceedings on behalf of the ultimate beneficiaries as it had barred itself from doing so by voting in favour of the resolution.

Discussion
It seems quite right to postulate that investment has become so complex that investors are prevented from exercising their rights against the issuer. It is agreed that giving a mechanism to allow the end investor to enforce rights is likely to be impractical, as Hannigan argued, potentially opening up the floodgates to claims including duplicate claims, as well as the increased cost and time in maintaing a accurate share register. However, moving away from the orthodox concept of 'member' may not be catastrophic if approached with the right caution. The 2006 Act itself moved away from another fundamental principle of company law, namely majority rule, with the introduction of the statutory derivative claim, allowing any member to enforce a right vested in the company in respect of a breach of duty, trust, default or negligence. This removed the bar of wrongdoer control and the rule in Foss v Harbottle (1847) 67 ER 189, which only allowed a derivative claim to proceed in the common law where it was shown  the wrongdoers were in control of the company, because where they were not it was for the majority to decide if the company should litigate and not an individual shareholder. This was overcome by putting relevant restrictions in place on allowing a claim, such as mandatory bars where the conduct has been ratified or authorised by an unconnected majority. Further the court is given the discretion to consider whether the conduct is likely to be ratified or authorised as well as taking in to consideration the views of disinterested shareholders. Cases brought under the new statutory claim have also been dismissed at the court's discretion where wrongdoers were not in control, so whilst it is not a bar to a claim, the court may use its discretion when determining whether to allow a claim and consider the issue of wrongdoer control. Therefore, it is tentatively suggested that it may be appropriate to open up derivative claims to end investors, extending section 260(5) or introduce a similar concept that allows end investors to litigate pending court approval. This may eliminate the objection raised by Hannigan about cost and the issue of the floodgates being opened by imposing appropriate safeguards on standing. As well, the law reformers may draw on many areas for inspiration where protection for end users has been developed, which was seemingly difficult if not impossible before intervention such as the Consumer Protection Act 1987, part 1 which protected consumers from defective products put in to the market by manufacturers.

Another concern is the intermediary who acts for multiple beneficiaries. In this case it may have been in the interest of some of its end investors to vote in favour of the resolution but not for others. However, initially it seems, BNY would not have acted against their duties in doing so. They have acted in the interests of the end investors by voting the way they believed to be the best interests of the end investor or were subsequently instructed to do so by Clearstream account holders who equally would have instructed based on what they believed to be the best interests of the end investors. Being barred from applying to the courts was a result of the statute and not mala fides.

Whether there is a fiduciary breach would require deeper analysis. Yes, the position can rightly be described as fiduciary but it is not clear if the duty of loyalty would have been breached. This requires a conflict of interest, which itself requires the fiduciary (i.e. the investment intermediary, in this case BNY and Clearstream account holders) to suspend self-interest and the interest of others and act in the sole interests of the beneficiary. By acting for multiple beneficiaries it is possible a conflict has arisen between the interests of the respected beneficiaries and if that is so the only way the intermediary may immunise themselves from liability is to get authorisation to act or alternatively demonstrate that there was not a conflict. The latter would require the fiduciary to demonstrate that they had not taken responsibility for the particular interest of the beneficiary allowing them to act against it for others. See, for example, Kelly v Cooper [1993] A.C. 205. The question then is whether by acting for multiple beneficiaries and voting on the same resolution, is this a conflict of interest? My answer would be yes. There is a risk that by acting for more than one beneficiary that their loyalty to one may compromise their loyalty to the other, similar to that seen in Extrasure Travel Insurance v Scattergood [2003] 1 BCLC 598. However, a further problem here is that even if it is a breach, the end investor may still be left without a remedy since in duty-duty conflicts the fiduciary may not profit personally. Therefore there is no profit to disgorge to the end investor. They would then have to try and claim equitable compensation but this requires causation i.e. a link between the actions of the fiduciary and the loss suffered. This may be difficult to show that the way they voted caused the loss suffered since one investor (Wickeder) "owned" 75.005% thus the loss would seemingly have been suffered regardless but I think this needs more analysis to be certain on how difficult it would be to prove than this blog post will offer.

As well, claiming this is a breach of fiduciary duty may cause practical problems for investment intermediaries as it would seemingly impact on their ability to act for clients without authorisation, which in turn may increase the cost of engaging with an investment intermediary.











Monday, 17 February 2014

Student Feedback

A short presentation on student feedback that I produced can be found here. The key focus is on how to improve engagement with feedback and breaks this down in to four sub headings each of which have their own two sub-headings as identified in the table on slide 3. I drew on the word engagement as this seems to be the "buzz" word at the moment in the literature on student feedback and tried to elaborate on its meaning through this work. I draw on literature to emphasise the importance of each point to maximise student engagement with their feedback and is hopefully edifying for some.

Friday, 10 January 2014

Law Commission Consultation on Fiduciary Duties of Investment Intermediaries with Hogan Lovells

Yesterday I attended a Consultation Workshop at Hogan Lovells LLP on the Law Commission's Consultation on Fiduciary Duties of Investment Intermediaries. The event was attended by a variety of people from different backgrounds including trustees, academics, lawyers and fund managers to name a few. The Panel consisted of three members, David Hertzell - Law Commissioner; Nick Cray - Chief Operating Officer at Hogan Lovells; and Dominic Hill - Partner in the financial services department at Hogan Lovells.

The Consultation was a result of the Kay Review - see here for Consultation paper and Kay Review - that stated that a series of recommendations, particularly recommendation 9 that stated 'The Law Commission should be asked to review the legal concept of fiduciary duty as applied to investment to address uncertainties and misunderstandings on the part of trustees and their advisers'.

I hope to respond to the Consultation in detail but below I outline some initial observations that I wish to explore further at a later date. I intend this blog post to initially be putting my thoughts down from what I know and most would require further investigation to reach substantive conclusions.

From Kay Review and Consultation Paper two areas could be discussed. First, who in the investment chain owes fiduciary duties. This the Law Commission sees as a difficult question given the flexibility of fiduciary duties, but I believe this is caused by a misconception and a need to separate the two elements of a fiduciary that are first, when does the duty of loyalty arise and second, if so, what is the scope of that duty. This approach can be seen in University of Nottingham v Fishel [2000] I.C.R. 1462, 1494. Failing to do that it can often lead to erroneous statements such as those cited from Henderson and Others v Merret Syndicates Ltd and Others [1995] 2 A.C. 145, 205 that not all fiduciaries will owe the same duties in the same circumstances. This cannot be correct given Lord Millet's judgment in Bristol and West Building Society v Mothew [1998] Ch. 1 that the duty peculiar to fiduciaries is the duty of loyalty. If the duty peculiar to fiduciaries is the duty of loyalty then all fiduciaries must owe the duty of loyalty. Whilst not endorsed specifically, this seems to be supported by Sedley LJ in Plus Group Ltd v Pyke [2002] EWCA Civ 370 at [80]. To ascertain when the duty of loyalty arises one must consider three questions. What is the duty of loyalty, what is the purpose of it and finally when is that purpose fulfilled. If someone is determined to owe the duty of loyalty they are subject to the full expanse of fiduciary jurisdiction. If someone owes the fiduciary duty of loyalty one can turn to the second issue as to the scope of that duty. With this application to investment intermediaries it may become apparent who does and does not owe fiduciary duties in the investment chain.

This leads to another area that needs further consideration in respect of Kelly v Cooper [1993] AC 205, discussed 11.28-11.38, which considers terms of a contract may limit the scope of fiduciary duties. In essence this is true. This limiting of scope is on the basis that equity cannot alter the terms of a contract validly entered in to. As seen in Ranson v Customer Systems plc [2012] EWCA Civ 841 at [68] equity needs something to be "hung from". Therefore the duty is circumscribed by what the parties agree as someone cannot be loyal for something they did not take responsibility for. However, the courts must be careful as to what they imply in to contracts between parties as they did with Kelly v Cooper. There needs to be some differentiation between conflicts and interests in proposed transactions as is the case in the Companies Act 2006 with ss. 175 and 177. s. 177 breaches may be excused where a principal ought reasonably to have been aware of the conflict but s. 175 breaches require full disclosure with authorisation to act. Implied terms that the estate agent is authorised to act for multiple principals is unlikely to amount to full disclosure with authorisation.

The second issue in respect of the Law Commission's consultation concerns best interests. The question/statement I raised was how to promote best interests beyond short-term financial gain? The Commission looks at whether the law allows financial intermediaries and trustees to consider the long-term interests of the ultimate beneficiary through investment beyond the short-term interest of financial gain through transactions. The answer to this question seemed to be a resounding yes that the law does allow intermediaries to consider wider, long-term interests. This was evidenced in Chapter 10 of the Consultation paper by cases such as Cowan v Scargill [1985] Ch. 270; Harries v Church Commissioners [1992] 1 W.L.R. 1241; Martin v City of Edinburgh District Council [1989] Pen. LR 9, 1988 SLT 329; and Buttle v Saunders [1950] 2 All E.R. 193. Whilst this is the status of the Common Law the legislation in this area is not entirely reflective of this ability to consider wider, long-term interests. The Occupational Pension Scheme (Investment) Regulations 2005 SI 2005 No 3378, reg 4 provides that the investment of assets is 'in the best interests of the beneficiaries' and in a manner 'calculated to ensure the security, quality, liquidity and profitability of the portfolio as a whole'. The wording would seemingly focus most people's minds on profit in the short term.

Whilst the law seems to accommodate wider interests, there is an 'accountability gap' in ensuring wider, long-term interests are considered. This was discussed at 3.31-3.32 of the Consultation paper that trustees did not want to dictate to the investment manager what to invest in, but the investment manager believed it was the trustees who should instruct them to consider wider, long-term interests. Arguably the burden should lie with the managers who are the professionals but the incentives have to be right for them to apply the long term interests. Therefore it seems the law has reached a dead-end, and only a few subtle changes may be necessary such as a restatement of Regulation 4 and perhaps a statutory statement of duties for clarity similar to Part 10 of the Companies Act 2006. The law requires the intermediaries, if classified as fiduciary, to remove any self-interest in the performance of their functions to the ultimate beneficiary, and allows the freedom of the intermediary to assess what they believe to be in the best interests of the beneficiary. How to create the right incentives may not be an easy answer but there seems to be strong focus on better shareholder engagement to create trust and confidence in the businesses that are invested in so long-term plans can be supported rather than questioned, but equally there should be appropriate monitoring to prevent that trust being misplaced. Whilst the duties may deter trust being abused such duties are only reactive and some controls ex ante may need to be assessed.

My final point is that the Law Commission must be careful not to classify best interests as a fiduciary duty based on remedial result. Not to go in to great detail but loyalty is about removing the risk of self-interest by banning conflicts of interest. Best-interests is wider than this in that someone may not act in the best-interests of a principal but the decision may have been free from self-interest. This confusion may be seen in ODL Securities Ltd v McGrath [2013] EWHC 1865, which I blogged about here. However, incorrect classification may have wider implications as discussed in Chapter 5, particularly 5.46-5.54. The decision in Mothew discusses the implications of considering all breaches by fiduciary a fiduciary breach. A remedy for breach of fiduciary duty is normally a restitutionary one. This is much more favourable to the claimant than a compensatory one. Whilst compensatory remedies may be available for breach of fiduciary duty as seen in Item Software (UK) Ltd v Fassihi [2004] EWCA Civ 1244, restitutionary remedies may not be used for breaches of best interests.


Sunday, 8 December 2013

Thesis: A wordle


Now my thesis is typed up I thought a wordle would be a good way to sum it up.

Unsurprisingly, to me at least, the common words appearing are company, director, non-executive and fiduciary. The last word fiduciary links with the most popular case cited of Bristol and West Building Society v Mothew [1998] Ch. 1.

I look forward to submitting this now! 

Friday, 6 December 2013

New publication

I have recently had published my book review of two key textbooks on company law. The review can be found via the following citation:

D Gibbs, 'David Kershaw, Company Law in Context: Text and Materials' (2013) 47(3) The Law Teacher 433

The review covers Kershaw's textbook as well as the 29th Edition of Mayson French and Ryan's (links to 30th edition) textbook on company law.

Monday, 28 October 2013

Fiduciary Duties of Investment Intermediaries

The Law Commission has published its Consultation Paper regarding 'Fiduciary Duties of Investment Intermediaries'. I blogged about the project initially here. The consultation paper and a summary can be found here and here respectively.

The consultation paper, according to para 1.1, sets out to: '... investigate how the law of fiduciary duties applies to investment intermediaries and evaluate whether the law works in the interests of end investors'.

I have only given it a cursory read so far but have initial observations in regards to defining of terms such as fiduciary - however, it is noted that the consultation now seems to have gone wider than fiduciary duties of investment intermediaries in to duties generally of investment intermediaries (see paras 9.15, 14.62 and 14.64). Fiduciary duties prevent any self-interest in the performance of the undertaking. The duty moulds itself to the particular undertaking of the financial intermediary to temper any self-regard in respect of that undertaking. Thus, if they act or omit to act because they are personally interested in what they are doing for their principal, any benefit obtained will be held for the principal. In short all other interests to the undertaking of the fiduciary (financial intermediary) must be subservient to the interests of the principal.

This seems as though it would be in the interests of end investors that there interests are placed first and the fiduciary must remove any self-interest or otherwise before acting. The principal's interests are therefore exclusive. It may be that the specific duties of the financial intermediary are not beneficial to the interests of the investors, which is why I think the consultation is now looking at duties generally, but first impressions would suggest that fiduciary duties are not the issue. However, continued recommendations on fiduciary duties would need a closer consideration regarding the defining of terms and when such a duty is owed.