Directors' Fiduciary And Statutory Duties

Every director of a corporation, regardless of whether it is a publicly traded corporation or a closely held private corporation, is subject to a common law fiduciary duty to act loyally and in the best interests of the corporation.

In Ontario, that common law duty is codified in Section 134(1) of the Ontario Business Corporations Act. The Act obliges every director and officer to act honestly and in good faith with a view to the best interests of the corporation and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

The duty to act in the "best interests of the corporation" means that directors must act in the interest of the corporation as a whole, rather than in the interest of any particular shareholder or group of shareholders. The best interests of the corporation are usually the same as the best interests of the shareholders as a whole, but in some cases acting in the best interests of