An Investigation into the the Duty of the Commercial Companies Directors to Avoid Conflicts of Interest and Personal Exploitation in English and Iranian Laws (with Emphasis on the Bill of Trade Law Approved in 1403)

Document Type : Original Article

Authors
Hamid Abhary 1
seyedeh tahereh mosavi khatir 2
Omolbanin ramzanzadeh badeli 3
1 Professor, Department of Private Law, University of Mazandaran, babolsar, Iran
2 PhD Candidate in Private Law, Faculty of Law & Political Sciences, University of mazandaran, babolsar, Iran
3 Assistant Professor, Department of Private Law, University of Mazandaran, babolsar, Iran
10.48300/jfel.2025.477966.1033
Abstract
Directors of commercial companies, are obliged to comply with fiduciary duties in the management of the company's affairs. One of the most important examples of compliance with the fiduciary duty is avoiding of conflicts of interest and non-profit of directors. One of the issues that the fiduciary duty is observed and the conflicts between the directors' personal interests and the company's interests are avoided is the prohibition of directors from taking personal advantage in positions, decisions and transactions related to the company. In English law, this duty is mentioned in Article 175 of the Companies Act of 2006. In Iranian law, there is no explicit reference to this issue in the Trade Law approved in 1311 and the Amendment Bill of the Trade Law approved in 1347. One of the initiatives of the legal bill of the Trade Law approved by the Islamic Council 1403 is that this issue is mentioned in paragraph 5 of article 598. Therefore, due to the importance of this issue, it will be examined in Iranian law along with a comparative study in English law. Finally, the conclusion reach that although this issue is explicitly mentioned in the new draft of the Iranian Trade Law approved in 1403, there are many gaps and legal defects in this regard, which are vital to investigate and fix. Therefore, the need to compile and enact comprehensive laws related to this duty and to eliminate gaps and legal deficiencies; especially considering the internationalization of commercial companies and the increase of cross-border exchanges, it is strongly felt.
Keywords
Conflict of Interest
Personal Exploitation
Director
Commercial Company
Fiduciary Duty
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Financial and Economic Law Research
Volume 1, Issue 2
March 2025
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