The Fiduciary Foundation of Corporate Law

The fiduciary relationship between directors and shareholders is based on the law of trusts. In early corporate law, and in common law, the fiduciary duty was owed only to the stockholders of a corporation. However, as the corporation evolved from being viewed solely as property to being viewed as a social entity, the fiduciary duty of directors has also evolved, and today it is often unclear to whom directors owe their fiduciary duty. This Article explores the history of directors' fiduciary duties, to whom directors' owe this duty, and directors' duty of disclosure. The author argues that the recent Enron collaps may cause use to reexamine traditional notions of private corporations' public responsibility and to whom the duty of disclosure is owed.