A fiduciary duty is the obligation that arises when one person is trusted to act for another’s benefit rather than their own. It is a higher standard than ordinary commercial dealing: a fiduciary must put the interests of the person they serve ahead of their own, and must be able to show that they did.
This guide explains what fiduciary duties mean in practical terms, who owes them, and where they most often go wrong. It sits alongside the IT Finance Professional duties and responsibilities cluster, part of the wider job duties guide. It is general information, not legal advice.
What Fiduciary Duties Mean
The relationship comes first, and the duty follows from it. Where someone has power or discretion over another person’s affairs, property or money, and that person is dependent on them exercising it properly, the law treats the relationship as fiduciary and imposes obligations of loyalty and good faith.
What distinguishes a fiduciary obligation from an ordinary contractual one is that the fiduciary cannot simply act at arm’s length in their own interest. They must act for the beneficiary, avoid situations where their own interest could conflict, and account for what they did.
Core Types of Fiduciary Duty
Fiduciary obligations are usually described under a handful of headings. The exact formulation depends on the relationship and the applicable law.
- Duty of loyalty and good faith: acting honestly and in the interests of the beneficiary or the organisation, not for personal gain.
- Duty to avoid conflicts of interest: not placing yourself in a position where your interest and your obligation could pull in different directions.
- Duty not to make a secret profit: not taking an undisclosed benefit from the position, including commissions, kickbacks or opportunities discovered through the role.
- Duty to exercise care, skill and diligence: applying the competence reasonably expected of someone in that position.
- Duty to act within powers and for a proper purpose: using the authority given for the purpose it was given, not for another.
- Duty to account and disclose: keeping proper records and disclosing relevant interests and information.
Who Can Owe Fiduciary Duties?
Fiduciary duties attach to positions of trust rather than to job titles. In South Africa the most commonly encountered are:
- Company directors: the Companies Act sets out directors’ standards of conduct, including acting in good faith and in the best interests of the company.
- Trustees: of trusts, retirement funds and similar structures, acting for the beneficiaries.
- Executors and curators: administering a deceased or incapacitated person’s estate.
- Attorneys and other professional advisers: acting on a client’s instructions and holding client funds.
- Agents and brokers: where they act on behalf of a principal with discretion.
- Senior employees: in some circumstances, where they hold real discretion over the employer’s affairs.
Committee office bearers such as a treasurer or chairperson may hold obligations of a similar character depending on the organisation’s legal form and constitution.
Examples of Fiduciary Duties
- A director declaring a personal interest in a supplier before the board votes on the contract, and then recusing themselves.
- A trustee investing fund assets for the beneficiaries rather than in a venture they personally benefit from.
- An attorney keeping client money in trust, separate from the firm’s own funds, and accounting for it.
- An executor distributing an estate according to the will rather than personal preference among the heirs.
- A director declining a business opportunity discovered through the company for their own account.
- A broker disclosing commission earned on a product recommended to a client.
Conflicts of Interest and Disclosure
Most fiduciary problems begin as undisclosed conflicts rather than outright dishonesty. Someone has an interest, assumes it is immaterial, does not mention it, and by the time it surfaces the failure to disclose looks worse than the interest itself.
The practical discipline is straightforward: declare interests early, record the declaration in the minutes, and step out of the decision. A register of interests that is updated annually and at each meeting is the simplest protection available to any board or committee.
Note that disclosure alone does not always cure a conflict. Depending on the relationship and the applicable rules, informed consent or a formal approval process may also be required.
Possible Consequences of Breach
Consequences depend entirely on the relationship, the conduct and the applicable law, and can include:
- Personal liability to compensate for loss caused by the breach.
- An obligation to account for and hand over any secret profit made.
- Setting aside of the transaction affected by the conflict.
- Removal from the position, or disqualification from holding it in future.
- Professional disciplinary action where a professional body is involved.
- Regulatory or criminal consequences in serious cases.
This is a general description of possible outcomes, not a prediction about any particular situation.
When Professional Advice Is Needed
Take legal advice, promptly, if any of the following applies: you are unsure whether you hold a fiduciary position; you have identified a conflict and are not sure how to handle it; you are being asked to approve something you believe is not in the organisation’s interest; you have been accused of a breach; or you are being appointed as a director, trustee or executor and have not read what that entails.
Accepting one of these appointments without understanding the obligations is the most common way people acquire duties they did not realise they had.
Related Director and Trustee Guides
- Chairperson duties and responsibilities
- Treasurer duties and responsibilities
- Segregation of duties
- IT, finance, HR and professional duties
- Job duties
A final practical point. Fiduciary duties are not limited to formal appointments made on paper. They can arise from the substance of a relationship, which is why someone who exercises real discretion over another’s money or affairs should assume the obligations apply and act accordingly, rather than waiting for a title to confirm it. Documenting decisions, declaring interests and keeping the beneficiary informed are the habits that make a fiduciary position defensible.
This page is general information about a legal concept and is not legal advice. Fiduciary obligations in South Africa arise under the common law and under statutes including the Companies Act and trust legislation, and their application depends on the specific relationship and facts. Consult a legal practitioner about your own position.
Last reviewed: 2 September 2026