Qualifying Characteristics of Good Faith Actions of Single Executive Body of Company

The purpose of the present thesis is determination and/or development of qualifying characteristics of good faith actions of single executive body of company and determination, based on this, of relations between the notion of good faith and the notions of reasonableness and fault. Key objectives of the thesis are (1) analysis and interpretation of the domestic and foreign regulations relating to the director's duty to act in good faith; (2) research of legal doctrine regarding the same; and (3) research of case law regarding the same. The first part of the present paper concerns characteristics of relations between directors and companies. The second part of the present paper relates to the analysis of the notion of good faith in private law. Further, it refers to the analysis of good faith as a requirement to the character of director's actions. The third part, and the last one, of the present thesis concerns the distinction between director's duty to act in good faith and his or her duty to act reasonably and the distinction between director's good faith and his or her fault for action that caused damages to company. As a result, the following conclusions have been made. Determination of good faith in director's actions is an objective test applicable to director's actions in a particular case. Additionally, good faith is the key characteristic of fiduciary relations between director and company. The role of director as a fiduciary involves acting for the sole interest and benefit of company and in accordance with legitimate expectations of its shareholders. The latter distinguishes good faith from reasonableness that, in turn, involves making of informed decisions by director. Considering fiduciary nature of the relations between director and company, and since director's duty is a duty to make efforts rather than a duty to achieve a result, the question of whether the actions have been made at director's fault shall not be examined by law enforcers.