In the leading case of Brunninghausen v Glavanics the appellant was the only active director and also majority shareholder. In the same company the respondent was the sleeping director and shareholder. The relations between the two directors, who are parties to the present case, became sour and both parties lost trust into each other. The respondent retained his position of the director as a formality as a result he was not given any information regarding the company’s affairs. The parties started negotiating to resolve the differences between them. The appellant, during the negotiation proceedings, received a proposal from a third party to purchase the assets of the company. The appellant negotiated with the party without giving information to the respondent. On the other side, the respondent got ready to sell his shares to the appellant at a rate which was much below the same rate which was paid by the party purchasing the company. The judge at the trial court held that the appellant had a fiduciary duty being a director towards the respondent being a shareholder. The judge also held that the appellant committed breach of his duty by not disclosing the facts of the other negotiation that he had with the third party.
