Module 11 (3&4) Flashcards
What is a directors “fiduciary obligation”
The obligation to act in the best interests of a corporation
A fiduciary is an individual who stands in a ________ of _______ to another person
Position of Trust
eg. lawyer to client, doctor to patient, director to corporation
What is the Shareholder Primacy theory?
The key goal of the directors is to maximize the profit of the shareholders (common in America)
What is the Stakeholder Theory?
Directors must act in the best interest of the corporations, not the shareholders (common view in Canada
What is a takeover
when a corporation takes over another corporation
During a takeover, what should the director consider?
How the sale of the company will effect the shareholders And the employees.
What happens if a director breaches their Fiduciary duty
They can be sued by the corporation
When are lawsuits for breach of fiduciary duty more likely to succeed?
When the director has benefited themselves at the expense of the corporation
When are lawsuits for breach of fiduciary duty LESS likely to succeed?
When the claim is that the directors acted to benefit one group of stakeholders to the detriment of another,
Courts have recognized two separate situations in which a corporation can raise a charter claim, what are they?
1) if a corporation is being regulated by a law that applies to humans (if the law would violate the charter rights of the human, it cant be applied to a corporation
2) if it can claim the charter right itself
What is the 2 step process to see if a corporation can claim a charter right?
1) Does the law use a term that describes them (if they say “every citizen”.. corporations cant use it becasue their not citizens, but if it says “everyone” they can use it
2) Can the corporation exercise this right?
