Discussion Activity 6.2

Consider whether a corporation can be a “Shadow Director” of another corporation?

In British Columbia Securities Commission v. Alexander, 2013 BCCA 111 per Madam Justice D. Smith:

“The legal test for a finding that an individual acted as a de facto director or officer is “’whether, under the particular circumstances, the alleged director is an integral part of the mind and management of the company, taking into account the entirety of the alleged director’s involvement within the context of the business activities at issue.  In Re IMAGIN Diagnostic Centres Inc., 2010 LNONOSC 632, the Ontario Securities Commission said (at para. 138) that a de facto director is one “…who maintains control over the affairs of the company and exercises the powers of a director and/or officer…”.

Given this test, I think it could be possible for a corporation to become a shadow director, due to corporations’ recognized personhood found under s. 30 of the BCBCA:

30. A company has the capacity and the rights, powers and privileges of an individual of full capacity.

It is important then, to be aware of this test as s. 138 of the BCBCA designates certain obligations, including the duty directors have under s. 142 to “(a) act honestly and in good faith with a view to the best interests of the company, and (b) exercise the care, diligence and skill that a reasonably prudent individual would exercise in comparable circumstances – when they have been found to be acting like a director for a company.