(2) will refrain from any action that involves competition with the company's business;
(3) will refrain from taking advantage of a business opportunity of the company in order to obtain a benefit for himself or others;
(4) He shall disclose to the Company any information and shall provide it with any document relating to its affairs, which came into his possession by virtue of his status in the Company [...]."
- Alongside this duty, an officer also has a duty of care. At the same time, it is common to see the duty of fiduciary duty as the most fundamental standard of conduct that an officer is required to meet, and there have even been those who have called for the abolition of the duty of care as an independent audit tool (Yoram Danziger and Omri Rahum-Twig, "The Rise of Business Judgment and the Fall of the Duty of Care of Directors," Gross Book 23, 44-46 (2015) (hereinafter: Danziger and Rahum-Twig); Similarly, in the law that applies in the State of Delaware, the concept that there can be no breach of duty of care without a breach of fiduciary duty is well established, see: ibid., at pp. 34-35; Yifat Naftali Ben-Zion: The Law of Trust in a Comparative Perspective – On Legal Theory, Case Law and Everything in Between 200 (2022); for a different approach, see: The Buchbinder case, at p. 333), as well as others who have suggested that the courts focus their attention on enforcing the duty of fiduciary duty (Zohar Goshen, "Economic Court and Line"The Boundary Between Mismanagement and Mischief Management," Mishpatim 47 541, 563-564 (2018) (hereinafter: Goshen); see also: Maayan Weissman, Assaf Hamdani, and Kobi Kastiel, "The Derivative Prosecution in Israel – An Interim Summary and a Look to the Future," Mishpat Ve-Business 24 799, 809-810 (2021)).
- The basic distinction between the duty of fiduciary duty and the duty of care is that the purpose of the duty of fiduciary duty is to determine the goal to which the officers are required to direct the company, while the duty of care is intended to outline the way in which they should navigate to this proper goal (Grosskopf and Ben-Zion, at pp. 146-147). In the light of this distinction, the duty of care has developed as a kind of branch of tort law, based on an objective standard of conduct that requires the officer, in essence, not to be negligent in his or her duties (see: sections 252(a) and 253 of the Companies Law). As a result, the company's cause of action is based on the damage caused to it.
On the other hand, the theoretical basis of the duty of fiduciary duty rests, inter alia, on the laws of enrichment rather than in law, "which focus on the self-enrichment of the violator and his subjective motive to derive personal profit from the action" (Civil Appeal 7735/14 Vardnikov v. Elovitch, paragraphs 48-49 [Nevo] (December 28, 2016) (hereinafter: the Verdnikov case); See also: Civil Appeal 3417/16 Fineros Holdings Ltd. v. Goldstein, paragraph 50 [Nevo] (July 12, 2021) (hereinafter: the Fineros case); Danziger and Rahum-Twig, pp. 25-26; Ben Zion, on page 199). This, as I will note below, also has implications for the various remedies that the court may rule on its breach.
- Let us focus again, then, on the duty of allegiance itself. This obligation, as stated, is basic – and in the aforesaid view it is perceived as such a trivial thing that naturally accompanies the very activity of the company, so that many years before its statutory anchoring, Justice S. Z. Cheshin noted that:
"The company's managers serve as the company's agents and manipulators. To a certain extent, they are the trustees of the company, and as managers they must direct their actions for the benefit of the company, and only for its benefit. No other interest, personal or lateral, must influence them and remove their hearts from society and its good [...]" (HC 100/52 Jerusalem Industrial Company Ltd. v. Agayon, IsrSC 6 887, 889 (1952)).