Last class we discussed whether a corporation could serve on a board of directors, which culminated in us learning that in fact they cannot—rather, that privilege is reserved for real flesh and blood human beings. However, based purely on a reading of the two statutes of which we have grown so fond over these past few months, that answer is no so self-evident.
While the statutes are structured differently, s. 124(1) of the BCBCA and s. 105(1)(c) of the CBCA both require that a director be an “individual”. The CBCA defines an individual as “a natural person”. The BCBCA does not provide a definition. On its face, that would appear to exclude a company.
However, s. 30 of the BCBCA gives companies “the rights, powers and privileges of an individual of full capacity”. To me, this would speak to a company being able to identify itself as an individual for the purposes of serving on a board of directors. While the “natural person” definition in the CBCA seems more restrictive, s. 15 of that statute gives a company “the rights, powers and privileges of a natural person”. Again, this would seem to give a company the right to identify itself as a natural person for the purposes of serving on a board of directors.
One of my learned friends argued that it is a simple exercise in statutory interpretation to deduce that the drafters clearly intended for boards to be composed of flesh and blood humans. In my opinion, with all due respect to Leon Getz, they could have been clearer about it. Both statutes could have included a subsection that states “A company cannot serve as a director”, but then again, where’s the fun in that?
I agree with you. They could have just included a very specific provision to address this. It’s strange how in all other instances corporations are treated as individuals, but in this circumstance the statute was interpreted as making a distinction between a natural person and a corporation. I still tend to be a sympathizer of the position that directors should be human beings and not corporations, simply because I believe the potential for personal liability of directors is much more real when the director is a person rather than a company.
Let’s look at these provisions in more depth…
BCBCA 124 (1) A person must not become or act as a director of a company unless that person is an individual who is qualified to do so.
CBCA 105(1) The following persons are disqualified from being a director of a corporation:
(c) a person who is not an individual
Further the CBCA 2(1) states: “individual means natural person”
To my knowledge, the list of things that may plausibly be considered an “individual” is exhausted by corporate persons and natural persons. So, there are really only two ways to interpret 105(1)(c) of the CBCA. It could be disqualifying: (1) a person who is not a natural person, or (2) a person who is not a corporate person. Of course a natural person can be a director. That’s satisfied both by common sense and reality. That leaves us with only one possible interpretation of the provision. That is, that corporate persons cannot be directors. The fact that the CBCA 2(1) specifically identifies that an individual is a natural person is merely icing on the cake.
I agree that the BCBCA is not as easy to interpret, but I think the same argument can be made. The provision disqualifies “… a person, unless that person is an individual who is qualified to do so” from being a director. The issue is that “individual” has “who is qualified” appended to it. Is this provision barring all persons who are not individuals, or only persons who are not “qualified” individuals? In other words, must a person be “an individual AND qualified” or just “qualified”?
In the former case, the situation would be the same as in the CBCA: persons who are not individuals can’t be directors. Again this must be interpreted either as natural persons can’t be directors, or corporate persons can’t be directors. I think you’d agree which of those interpretations is more plausible. The latter case, persons must be qualified, does not necessarily preclude corporations (unless you think a corporation can’t be qualified, which is another question).
You and I know that the legislature does not legislate in vain. With that in mind, if the intention was to allow all qualified persons to be directors, why is the word individual used at all? The provision could easily read:
“… unless that person is qualified to do so.”
But it doesn’t. It reads:
“… unless that person is an individual who is qualified to do so.”
The addition of “is an individual” where it would be otherwise superfluous suggests it is meant to have an alternative meaning to “person”. If it’s meant to have an alternative meaning than person, that meaning must be “natural person” (from the argument above). Therefore, the statute does not allow corporations to be directors.
Like I said before, a simple matter of statutory interpretation.
As another of the ‘learned friends’…I agree with you Dan. To add to Piers’ point about vagueness, though, that vagueness is compounded by some of the Charter jurisprudence regarding statutory interpretation of ‘individual’. Most of the case law (and our textbook) indicates that ‘individual’ does not include corporations. This jurisprudence is used to bolster the argument that ‘individual’ in the BCBCA and CBCA only means natural persons.
As we saw however, in R v CIP Inc the court asked simply “whether the corporate accused has an interest that falls within the scope of the right protected by the Charter provision in question”, in determining whether a corporation could rely on a Charter provision. This seems to undermine the categorical statutory interpretation principle that ‘individual’ doesn’t include corps. A litigant might be able to invoke that test, in conjunction with the lack of specific provision in the BCBCA defining ‘individual’, in order to argue that the phrase includes corporations. Probably couldn’t do so with the CBCA given the definition in s.2(1).
Vagueness begets vagueness!