I am glad to be able to say that my perception of corporate personhood that I had coming into this course has been reshaped radically through learning about the complexities inherent in corporate governance. Better understanding the tensions between different key actors such as directors, shareholders, and management, has helped me surpass my formerly simplistic notion about the evils of limited liability and corporate personhood.
Leaving this course I am more optimistic about the direction the Canadian courts are taking the corporations in. Even if looking at the historical changes in the jurisprudence the pace of change seems too slow, at least on the topic of director duties there have been some positive changes. The historical approach highlighted through the Dodge case allowed only one interpretation of acting in the best interests of the company, that of maximizing the profit for the shareholders. The newer approach emphasized in Peoples and BCE clarified that in determining whether directors are acting with a view to the best interests of the corporation it may be legitimate for the directors to consider, inter alia, the interests of shareholders, employees, suppliers, creditors, consumers, governments and environment. I believe the changes in our culture and our society’s increasing ambition to hold corporations responsible is reflected in these decisions. However, this new principle only permits the directors to consider these other stakeholders’ interests and it doesn’t exactly place this obligation on them. Although it’s a huge step, this provision still only operates to protect directors. I am looking forward to a more radical shift, where perhaps the courts could change the wording to “directors must consider” these interests. Although this principle still wouldn’t mean that directors must also act in a way that reflects their concern for other stakeholders’ interests, the principle would still have the potential to inject more accountability into corporate governance.
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As you identify and as we’ve learned throughout this course, it’s frustratingly unclear how directors are to account for the interests of non-shareholder stakeholders in their decision-making. Of course, as has been mentioned in the posts on Tim Cook’s comments about “the bloody ROI,” there are numerous reasons why directors do and should consider the interests of non-shareholder stakeholders: it often makes good business sense to do so; they have concerns about the possible use of the oppression remedy if they don’t; and simply because BCE left this question open, it’s the safe and cautious choice. Where along the continuum does this obligation fall: Directors may consider? Should consider? Are obligated to consider? Somewhere in between? It’s unclear.
I agree with you that this developed is a positive step forwards in the area of corporate governance, but from the perspective of directors, practitioners, lower court judges (and law students), a bolder and more clear statement would have been more useful and helpful.