Key Lessons From The BCE Decision

The Supreme Court of Canada (SCC) released the long-awaited reasons for its decision in the BCE Inc. v. 1976 Debentureholders case on December 19, 2008. The SCC reaffirmed its decision in Peoples Department Stores Inc. (Trustee of) v. Wise that the directors' fiduciary duty is owed to the corporation, and not any particular constituency, thereby rejecting a "Revlon" duty to maximize shareholder value in change of control transactions.

Although the SCC said that directors "may" but are not required to give consideration to the interests of a range of stakeholders, including shareholders, employees, suppliers, creditors, consumers, governments and the environment, the practical effect of the SCC's decision is that directors will need to assess a range of interests when exercising their business judgment. This is because the SCC: