Peoples, BCE, and the Good Corporate 'Citizen'

Abstract

This article considers the use of various legal instruments to advance a more expansive but well-defined view of directors’ duties and discretion - a view which focuses on the longer term interests of the corporation. We begin with an attempt to clarify the nature of directors’ statutory duties under Canadian corporate law. We then consider the recent decisions of the Supreme Court of Canada in Peoples Department Stores Inc. (Trustee of) v. Wise and BCE v. 1976 Debenture holders, in which the Court took a broad view of corporate purpose, but failed to provide clear logic or operational guidance as to consequential directorial responsibilities. As a result, the Court may have afforded directors increased deference, provided they comply with prescribed procedural steps, but without a clearly stated legal rationale. We then outline various legal theories that courts might consider help advance and clarify some of the concepts averted to by the Supreme Court and discuss opportunities for complementary legislative or shareholder-initiated reform.