The Legal Challenges of Directors Filing Lawsuits Against Commercial Companies: Conflict of Interest and Legal Solutions
Document Type : Original Article
Authors
1
Ph.D.Student in Private Law. University of Qom. Qom. Iran
2
Professor, Department of Private Law, Faculty of Law, University of Qom, Qom, Iran
Abstract
Abstract:
This study examines the challenges of directors filing lawsuits against commercial companies, with a focus on conflicts of interest. The objective of this research is to provide a detailed analysis of conflicts of interest in such litigation, identify their theoretical foundations, and propose legal solutions for their effective management. Employing a descriptive-analytical research method, relevant library and online resources were reviewed and evaluated. The findings reveal that conflicts of interest in lawsuits initiated by directors against companies undermine the fiduciary duties of loyalty, care, and good faith. Such conflicts may lead to the misuse of confidential information, organizational instability, litigation costs, and reputational damage to the company. In the Iranian legal system, scattered regulations exist to address conflicts of interest, but the absence of a comprehensive and unified framework complicates the management of this challenge. Common law and civil law systems have developed effective approaches by leveraging robust oversight mechanisms and transparency requirements. This study proposes that implementing preventive, supervisory, and judicial measures—such as mechanisms to restrict behavior, enhance oversight, and establish legal sanctions—can effectively manage directors' conflicts of interest, thereby sustainably balancing their personal interests with the collective interests of commercial companies.
This study examines the challenges of directors filing lawsuits against commercial companies, with a focus on conflicts of interest. The objective of this research is to provide a detailed analysis of conflicts of interest in such litigation, identify their theoretical foundations, and propose legal solutions for their effective management. Employing a descriptive-analytical research method, relevant library and online resources were reviewed and evaluated. The findings reveal that conflicts of interest in lawsuits initiated by directors against companies undermine the fiduciary duties of loyalty, care, and good faith. Such conflicts may lead to the misuse of confidential information, organizational instability, litigation costs, and reputational damage to the company. In the Iranian legal system, scattered regulations exist to address conflicts of interest, but the absence of a comprehensive and unified framework complicates the management of this challenge. Common law and civil law systems have developed effective approaches by leveraging robust oversight mechanisms and transparency requirements. This study proposes that implementing preventive, supervisory, and judicial measures—such as mechanisms to restrict behavior, enhance oversight, and establish legal sanctions—can effectively manage directors' conflicts of interest, thereby sustainably balancing their personal interests with the collective interests of commercial companies.
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