Tuesday, May 30, 2006
Robert Flannigan (Professor, University of Saskatchewan) has recently released his article The Political Path to Limited Liability in Business Trusts on SSRN.
Here is the abstract of his article:
Following American initiatives, interest group efforts to acquire statutory limited liability have recently accelerated in Canada. Social elites have persuaded provincial legislatures to selectively alter conventional liability rules in a variety of contexts. There is no satisfactory analytical foundation for these radical moves. In the case of the business trust, the immunity legislation was engineered through an appeal to the undeveloped notion of investor protection and the tactical exploitation of provincial concerns with market share. The intention was to reshape conventional responsibility to accommodate investor harvesting and fee generation. While those objectives were realized, it would appear that the legislation actually only confirms the original liability configuration.
If it does grant non-contingent immunity, the new legislation is a testament to the efficacy of organized lobbying in elevating narrow self-interest over general legal principle.