As the case readings suggest, the corporate purpose cannot be defined narrowly as only serving the shareholders’ interests. Dodds noted that fiduciary duties are owed to a much larger constituency, including shareholder interests, the interests of corporate employees, and broader social goals.
The decisions from the SCC in Peoples and BCE suggest that directors will need to careful to act honestly and in good faith with a view to the best interests of the corporation. In BCE, the court cited s. 122(1)(b) of the CBCA, which may be the basis for liability to other stakeholders, but does not provide an independent foundation for claims. It was further suggested that courts should give appropriate deference to the business judgment of directors who take into account these ancillary interests, as reflected by the business judgment rule.
In Peoples, the court suggested that adequate consideration of stakeholders’ interests is one which does not appear biased towards any particular stakeholder group. The difficulty in assessing adequate consideration of stakeholder interests for a director is that those stakeholders have varying interests (ex. the interests of the shareholder vs. the creditor when the corporation is in financial crises). Is it enough to simply say that one group has a more substantially-vested interest than the other?
Ultimately, the court provides a significant amount of deference to decision-makers, by emphasizing the business judgment rule. While an affected party may raise an oppression claim, the “range of reasonable choices” which a director can take according to “business realities, not merely narrow legalities”, suggests that the threshold level for adequate consideration is not particularly tough to pass (quotes from BCE).
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To add onto this: if the court is deferential to the “business judgment” of corporate directors, to what extent are those business decisions allowed to look towards long-term profitability despite a short-term loss? While the mythos is that corporations are all about short-term profit-seeking and discouraged from long-term foresight, it doesn’t appear (at least from these cases) that there is any jurisprudential reason for this to be the case. Rather, it seems that short-sightedness is a result of fear of prosecution if a business decision is to go awry. Perhaps courts should consider a broader conception of “best interest” – eg. consider the situation from the point of decision-making: if a decision looked profitable, for instance, but turned out to be a loss. It might allow more holistic analysis and decision-making by corporate directors.