A Team Production Theory of Canadian Corporate Law

Abstract

Stout, to argue that Canadian corporate law's understanding of public corporations that are not controlled by a single shareholder or group of shareholders reflects a director primacy norm rather than a shareholder primacy norm. Canadian corporate law provides that directors ofsuch public corporations with widely-held share ownership and voting rights arefreefrom direct control by any corporate stakeholders. A potential departing point for Canadian corporate law. the oppression remedy, continues to develop to deal with extra-legal advantages rooted primarily in unequal power relations among corporate stakeholders. However, in its current and predicted future applications, the oppression remedy does not provide any given stakeholder group with an ability to dominate the boards of public corporations and obviate the director primacy norm. The article suggests that because the director primacy norm accurately describes Canadian corporate law. further consideration needs to be given to corporate law'.« relative relevance in dictating how Canadian corporations currently operate. Cet article a trail a la iheorie de la production d'equipe developpe'e par des e'rudits du droit americain des societes. notamment Margaret Blair et Lynn Stout, a savoir que les socie'te's ouvertes i/ui ne sonl pas conlrale'es par tin seul actionnaire on tin grotipe d'actionnaires rejletentpliitoi la nonne de la primaule des administrateurs que celle de la primaule des acliottnaires. Le droit canadien des socie'te's stipule que les administrateurs des socie'te's ouvertes avec un grandnombre d'actionnaires el de droits de vote soul fibres du controle direct des intervenanm des sociele's. Eventuel point de depart pour le droit canadien des societes, le remede a I oppression continue a se developper en vue de trailer avec les avantages exlrajudiciaires ancres principalemenl dans les relations depouvoir inegales enlre les inlervenants des societes. Cependanl. dans ses applications actuelles el prevues. le remede de I 'oppression nefournil a aucun groupe d'intervenants donne la capacite de dominer les conseils d 'administration des sociele's ouverles et d'eviter ainsi la norme de la primaule des adminislrateun.

The Future of the Corporation: the avenues for legal change

“…As a result, stakeholders filed a limited number of derivative actions in Canada. Some scholars have criticised such an approach, arguing that it is insufficient to ensure that stakeholders could exercise control over the board (Ben-Ishai 2006;Sarra 2006;Vasudev 2015). Against this background, an important issue to consider in establishing derivative actions for stakeholders in the UK would be whether the law should define a list of stakeholders that are entitled to file a lawsuit, instead of leaving such a definition for courts to decide on a case by case basis.…”

“…Furthermore, Canada adopts an approach, similar to the one of US jurisdictions such as NY and Delaware, in contrast with the shareholder primacy approach currently enshrined by UK legislation (Ben-Ishai 2006;Vasudev 2015). This approach limits the possibility for shareholders to sue directors in order to allow the board to exercise more flexibility in the management of the company.…”

“…This would represent, by itself, a revolutionary change in UK company law. However, Canada has already adopted a similar approach as shareholders' approval is not a determinative factor for courts to decide whether to allow stakeholders to file a derivative lawsuit (Ben-Ishai 2006).…”

“…Second, when a stakeholder uses the oppression remedy, it protects mere interests, which may conflate with the rights of shareholders. In this competition between stakeholders' interests and shareholders' rights, Canadian courts have often preferred shareholders' rights (Ben-Ishai 2006;Sarra 2006).…”