Date of Award


Degree Type





Professor Thomas Telfer


This thesis examines the competingprinciples within the decision-making modelsfor what it means for directors and officers to act in the best interests of the corporation. The first model is the traditional shareholder primacy model, which shifts to a creditor primacy model in a situation offinancial distress or insolvency. It requires directors and officers to maximize corporate value for the benefit of the corporation’s residual economic beneficiaries. The second model is the pluralistic decision-making model, adopted by the Supreme Court of Canada as the law in this country. It requires directors and officers to identify, consider and treat fairly all interests affected by the contemplated corporate decision. Atplayarethefollowingtwopublicpolicyobjectives:promotingeconomicactivity for the general benefit ofsociety; andprotecting stakeholder interests that may beprejudiced in a socially unacceptable wayfrom thepursuit ofthefirst objective. This thesisprefers the shareholder primacy model, switching to a creditor primacy model in financial distress or insolvency. The underlying rationalefor thispreferred model is maximization ofcorporate value for the greatest number, thereby promoting economic activity. Stakeholder interests are not sacrificed as there exists an extensive system o f statutory protections supplemented by common law and equity.



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