TY - JOUR
T1 - A Critical Canadian Perspective on the Benefit Corporation
AU - Liao, Carol
PY - 2017
Y1 - 2017
N2 - There has been much fanfare surrounding the possible implementation of a legal model of social enterprise similar to the American benefit corporation in Canada. This article points out that some of the fundamental legal characteristics of the benefit corporation are already reflected in existing Canadian corporate laws, and in some instances Canadian laws are comparatively more progressive. Directors owe fiduciary duties to the best interests of the corporation, and minority protections such as the oppression remedy oblige directors to consider non-shareholder stakeholders. Landmark judgments from Canada’s highest court have affirmed the board requirement to consider stakeholder interests, and that directors are not confined to short-term profit or share value. The Supreme Court of Canada has highlighted that directors are required “to act in the best interests of the corporation, viewed as a good corporate citizen” and “commensurate with the corporation’s duties as a responsible corporate citizen.” Canada does not need to adopt American solutions to American problems. During these formative years in Canadian corporate legal development, the nation’s legal stance must be properly understood and taken into account when establishing new legal entities for social enterprise, so as not to confuse and/or jeopardize that stance. This article will lay out the arguments against the adoption of the benefit corporation in Canada, in hopes that the debate will be laid to rest and energies will shift toward more effective reforms to producing social change through Canadian corporate laws, be they via new legal forms or not.
AB - There has been much fanfare surrounding the possible implementation of a legal model of social enterprise similar to the American benefit corporation in Canada. This article points out that some of the fundamental legal characteristics of the benefit corporation are already reflected in existing Canadian corporate laws, and in some instances Canadian laws are comparatively more progressive. Directors owe fiduciary duties to the best interests of the corporation, and minority protections such as the oppression remedy oblige directors to consider non-shareholder stakeholders. Landmark judgments from Canada’s highest court have affirmed the board requirement to consider stakeholder interests, and that directors are not confined to short-term profit or share value. The Supreme Court of Canada has highlighted that directors are required “to act in the best interests of the corporation, viewed as a good corporate citizen” and “commensurate with the corporation’s duties as a responsible corporate citizen.” Canada does not need to adopt American solutions to American problems. During these formative years in Canadian corporate legal development, the nation’s legal stance must be properly understood and taken into account when establishing new legal entities for social enterprise, so as not to confuse and/or jeopardize that stance. This article will lay out the arguments against the adoption of the benefit corporation in Canada, in hopes that the debate will be laid to rest and energies will shift toward more effective reforms to producing social change through Canadian corporate laws, be they via new legal forms or not.
KW - Ethics
KW - Legal Ethics
KW - Professional Ethics in Law
KW - Business and the Law
KW - aw and Society
KW - Benefit Corporations
KW - Corporations
M3 - Article
SN - 1078-1927
VL - 40
SP - 683
EP - 716
JO - Seattle University Law Review
JF - Seattle University Law Review
IS - 2
ER -