BCBCA s 33

On my reading of the provision, the effect is roughly that of a strong admonition.  Subsection (1) commands that a corporate person refrain from certain actions.  It is worded as if it were mandatory, and its codification in statute would appear to lend it gravity.  But while its practical effect is almost entirely undermined by subsection (2), it continues to express a forceful position.

For me, subsection (2) epitomizes the malleability and unprincipled basis of corporate law.  It maintains the overwhelmingly fact-based and contextual analysis found in most of the areas we have studied, and provides for huge judicial discretion.

Together, it seems that this section is the legislature saying, you really shouldn’t act outside of your stated purpose, but, we leave it to the judge.

More practically, subsection (1) may not go as far as to set a presumption that such acts will be invalid which can then be rebutted, but it does allow you to say you’ve gone part of the way to establishing that they should be invalid.  It is sort of a two part test – (1) asks whether they were outside the purpose, and (2) asks you to look at the entirety of the context to see if it provides an (equitable?) reason to find the acts invalid.

One response to “BCBCA s 33”

  1. jaehyuk lee

    I agree, but I THINK subsection 2 exists because subsection 1 can be abused.
    The company can potentially make invalid their acts (for their own benefit – say, invalidating a contract for example) by abusing subsection 1.
    The courts still have discretion. Subsection 1 and its implications are strongly worded, as you point out.

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