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Abstract

This paper is concerned with one particular aspect of the fiduciary duty of directors, that being the duty to act ‘for a proper purpose’. It would be fair to say that this aspect of the fiduciary standard has often caused considerable difficulty in analysis. While it is axiomatic to hold that a power that is given must be used for the purpose for which it was originally granted, it is often hard to perceive the basis on which the analysis proceeds. It is submitted that this confusion as to the proper basis for the imposition of the ‘proper purpose’ standard explains the confusion that arises from consideration of the cases.

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