Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, November 18, 2013

Liao on Canadian Securities Regulators

Carol Liao has posted A Canadian Model of Corporate Governance: Insights from Canada's Leading Legal Practitioners on SSRN with the following abstract:

This report comes at a unique time in Canadian corporate governance history. It has been five years since the landmark decision of BCE Inc. v 1976 Debentureholders, a plan of arrangement case where the Supreme Court of Canada specifically addressed director duties in relation to stakeholder interests. In the decision, the court affirmed its earlier findings in Peoples Department Store Inc. (Trustee of) v. Wise and seemed to shift away from an Anglo-American definition of shareholder primacy. But of course, the current state of Canadian common law is only one part of a larger story. The Canadian securities commissions have become increasingly influential in the governance sphere, and by design are shareholder-focused. Canada is considered one of the most bidder-friendly jurisdictions in the world, as Canadian boards have a limited number of defensive tactics when faced with an unsolicited takeover bid. Shareholders’ rights have increased well beyond what was ever contemplated by Canadian corporate laws, and the issue of greater shareholder vs. board control has now become the topic of live debate. The release of competing proposals from the Canadian Securities Administrators and the Autorité des Marchés Financiers regarding the use of shareholder rights plans and defensive tactics in general have put these issues under increased scrutiny in Canada.

The conflicting theoretical positions from the courts and the securities commissions have enriched the dialogue on the current environment of Canadian corporate governance. This qualitative study brings together some of the top corporate legal minds in Canada to opine on the fundamental principles that are driving the development of Canadian corporate governance today. Interviews were conducted with 32 leading senior legal practitioners across Canada, who spoke candidly on matters involving shareholder primacy, director duties, stakeholder interests, common law and the courts, regulatory bodies, and the future trajectory of Canadian corporate governance, among other things. The observations from these senior practitioners provide a pulse check on the dynamic field of Canadian corporate governance. Taken within the context of today’s legal and regulatory environment, their insights piece together the framework of a Canadian model of corporate governance to further director knowledge and help inform future research.

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