The BCE Case: Consequences on the Duties of Boards of Directors

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The BCE Case: Consequences on the Duties of Boards of Directors

Bell Canada Entreprises (« BCE »), Canada’s telecommunications giant, was recently at the center of the most important corporate law dispute in Canadian judicial history.  Indeed, a group of BCE’s bondholders vigorously contested the plan for the acquisition of BCE implemented by the Ontario Teachers Pension Plan (“Teachers”, one of Canada’s major institutional investors). The structure of this acquisition plan, a leveraged buyout, necessitated massive loans against BCE’s assets.
This increase of BCE’s indebtedness reduced the resale value, on the securities markets, of ...

Shareholders’ Agreements: Essential or Superfluous?

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Shareholders’ Agreements: Essential or Superfluous?

Even though many disregard their necessity at the time of a company’s inception or when a new shareholder arrives, it is undeniable that a shareholders’ agreement is no longer a luxury, only becoming essential when a conflict or deadlock arises between the shareholders. There are two types of shareholders’ agreement: 1) an ordinary agreement to govern the shareholders’ relationship with each other; and 2) a unanimous agreement which, although it can also govern shareholder relations, has for primary objective the restriction ...

Directors’ clash of interests

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Directors’ clash of interests

The Canadian Business Corporations Act (Federal) and the Companies Act (Quebec) both foresee that a corporation’s director, contrary to shareholders, must act in the corporation’s best interest. In fact, a corporation’s director must avoid placing himself in a conflicting position with regard to the corporation’s interests. Such obligation to act in the corporation’s best interest is easily reconcilable for a director only attending to one Board of Directors. However, when a director attends to several Boards of Directors, he may be ...

Corporations: A Convenient Business Vehicle for Professionals

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Corporations: A Convenient Business Vehicle for Professionals

As with any economic activity, the practice of a profession entails important financial responsibilities. Yet, as opposed to other businesspeople, professionals were traditionally forbidden from limiting their liability by practicing carrying out their activities through a corporation.
Nowadays, this state of affairs has fortunately evolved: since 2001, the Professional Code allows professionals to practice their trade through a corporation, so long as a regulation of their particular professional order authorizes it. As such, as of May 2011, a total of seventeen ...

Corporate governance laws & the liability of corporate directors.

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Corporate governance laws & the liability of corporate directors.

Following the financial scandals of recent years, more and more lawsuits are instituted against corporate directors; hence: a scarcity of candidates for these positions. Corporate directorship can be a fascinating and prestigious occupation, but it nonetheless remains a potential risk and may lead to important consequences. The function of corporate director implies certain obligations, which are often poorly known or understood by the interested party. Indeed, several laws impose certain responsibilities upon directors toward (among other things) unpaid salaries of employees, ...