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Let's talk antitrust: Discussing recent cases and emerging competition issues
Recent cases and judgments have shone a light on some emerging themes and trends that companies will want to consider as part of their risk management framework.
Canada | Publication | May 29, 2020 - 12 PM ET
In times of crisis, directors may find it more challenging to discharge their fiduciary duty, as certain decisions must be made promptly, while the interests of various stakeholders evolve quickly and may conflict. For many corporations, the current pandemic will put the stakeholders’ primacy model to the test.
Although the CBCA now provides that the best interests of a corporation may be informed by the interests of different stakeholders, the statute remains silent as to the relative importance of each group of stakeholders. What should directors do when different groups manifest conflicting interests?
The Supreme Court’s decision in BCE highlights that, although stakeholder interests should be taken into consideration, directors should remember their duty is to act in the corporation’s best interests.7 The Supreme Court outlines that no one stakeholder is more important than the others when determining the best interests of the corporation, and that assessing competing interests depends on the factual situation.8
Various groups may have competing expectations, concerns and requests, which may inevitably lead to directors facing tensions in applying their fiduciary duty. Since directors are elected by shareholders, they may naturally be inclined to favour such group in order to improve their chances of being re-elected. The following are examples stakeholders whose interests may conflict with those of shareholders during a pandemic:
Properly taking into account all relevant interests in these circumstances requires a delicate balancing act at the board level. Directors must make sure that management acts swiftly when required, while keeping their eyes on the best interests of the corporation and the fact there is to be a return to “normal” life after COVID-19. They should remember that in the BCE decision, the Supreme Court of Canada stated that when stakeholders interests diverge, directors must act “in the best interests of the corporation, viewed as a good corporate citizen.”10
Directors’ main role is to oversee managerial efforts. When facing a crisis, directors should first implement an oversight structure that ensures the decision-making process is adequate and would withstand the parameters of the business judgement rule. For instance, some boards may consider creating a separate “crisis committee” to which they delegate specific responsibilities in order to centralize and streamline decision-making. Other boards will increase the frequency of their meetings and ask that new matrices be included in the risk management dashboard presented to them. These actions will help directors demonstrate that they properly discharged their duty of care.
However, a protocol should also be put in place to help directors invoke the protection of the business judgement rule with respect to their fiduciary duty.11 Having such a protocol in place is important, as directors will be judged by the process they followed:
Video
Recent cases and judgments have shone a light on some emerging themes and trends that companies will want to consider as part of their risk management framework.
Publication
After a lacklustre finish to 2022 when compared to the vintage year for M&A that was 2021, dealmakers expected 2023 to see the market continue to cool in most sectors, in response to the economic headwinds of rising inflation (with its corresponding impact on financing costs), declining market valuations, tightening regulatory scrutiny and increasing geopolitical tensions.
Publication
On 18 September 2023, the CMA published its Initial Report (Initial Report) on AI Foundation Models (FM), supplemented in April 2024 with the publication of its “Update Paper” focused on potential antitrust risks associated with FMs and a “Technical Update Report” providing more detail on the development on FMs (collectively the “Reports”). Below, we consider these CMA publications.
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