Nick Shaxson ■ Shareholder value and the fiduciary duty of company directors: a view from Israel
This is our second Israel-related blog in the past week. From TJN-Israel and the Corporate Responsibility Institute at the College of Law and Business, a new report looking at a subject dear to our hearts: whether or not company directors are bound by their fiduciary duties to avoid tax.
We already obtained an unequivocal formal legal opinion on this for the UK, that there is no such duty – and all the evidence suggest this is the case for the U.S. and many other countries. Now this new paper analyses Israeli laws in relation to corporations’ tax planning, looking at the proper balance to be struck between the fiduciary duties of senior corporate officials, their obligations to the public, and their professional ethical codes.
The paper argues, among other things, that because the corporation is itself obliged to refrain from any activity that is not aligned with the public interest, the fiduciary duty of senior corporate officials does not include an obligation to engage in aggressive tax planning. With regard to professional consultants, such as lawyers and accountants who work in the corporation, it is argued that not only do they have no obligation to engage in aggressive tax planning, but participation in aggressive tax planning might even be considered a violation of their ethical duties — as they are subject to enhanced loyalty obligation to the public, for example as ‘officers of the court’.
Read the full report here.
One more to add to our Shareholder Value archives.