Corporate Stakeholders in Canada: An Overview and a Proposal
45 Pages Posted: 29 Jun 2011 Last revised: 23 Apr 2015
Date Written: February 1, 2013
The stakeholder vision has emerged as an influential stream in corporate governance. In the English-speaking world, Canada was the pioneer in introducing a regulatory stakeholder regime. This article examines the Canada Business Corporations Act (CBCA) for its concern for non-shareholder groups, in particular, their inclusion in the remedies provided in the statute and the experience with it. After making a critical review of the CBCA stakeholder regime, the article proposes specialized agencies to deal with intra-corporate or stakeholder disputes in business corporations. The stakeholder remedy in the CBCA is egalitarian. It posits a doctrinal equality between shareholders and other constituencies. An issue with the stakeholder remedy the CBCA promotes and the stakeholder empowerment it attempts in this process is their ex post principle. It is about intervention after conflicts have arisen between corporate actors. The framework is derived, essentially, from private law ideas about disputes and resolving them through litigation. As a result, the stakeholder regime in the CBCA does not sufficiently adopt the institutional approach to lawmaking. Yet the CBCA regime is a positive beginning, which can graduate towards a more wholesome model, one with the stakeholder vision as an informing principle of governance.
The oppression remedy in the CBCA is also available to non-shareholder groups. Yet, the article argues, it has not been applied in an effective manner to resolve disputes raised by corporate stakeholders. The business judgment rule that courts apply to refrain from inquiring into corporate disputes is an important factor in undermining the statutory remedy available to non-shareholder groups. To overcome some of the difficulties posed by the business judgment rule and courts' lack of business expertise, the article proposes the creation of specialized, interdisciplinary panels to inquire into stakeholder disputes. This can help in making the stakeholder vision in Canadian corporate law more real and robust.
Keywords: Corporate governance, stakeholders, directors, oppression remedy, adversarial litigation, directors' duties, multi-fiduciary duties, Canada, Canada Business Corporations Act, business judgment rule, alternative dispute resolution, aritificial reasoning in law
JEL Classification: G30, G35, G34, G38, J51, J52, K22, K41, M14
Suggested Citation: Suggested Citation