An Indeterminate Theory of Canadian Corporate Law

University of British Columbia Law Review, Vol 47:1, 2014

71 Pages Posted: 21 Feb 2014 Last revised: 27 Jun 2017

See all articles by Claudio R. Rojas

Claudio R. Rojas

National Angel Capital Organization

Date Written: January 2014


In revisiting apparent contradictions within the Supreme Court’s decision in BCE Inc. v. 1976 Debentureholders, this article illustrates a significant evolution in the jurisprudence – challenging the applicability of both shareholder primacy and stakeholder theory. In rejecting these established theories in favour of an organizing ‘principle of fair treatment’, Canadian corporate law reflects elements of Warren Buffett’s novel approach to corporate governance. This article is seismic in its implications.

In the U.S., the era of the Berle-Means dispersed share ownership structure is in decline. Increasingly, shareholders wield the power to determine or significantly influence corporate policy in U.S. firms. In focusing upon this evolution in share ownership structure – specifically, narrowing within the separation between ownership and control – a distinct economic theory for the enhanced efficiency of business corporations is emerging.

This article is structured in three parts. Part II analyzes the oppression remedy and its interlink with the fiduciary duty. Part III challenges the team production and principal-agent models. Part IV presents an alternative, the concentrated shareholder model, emphasizing the power differential between concentrated and diffused shareholders. The term discriminatory opportunism is introduced to describe concentrated shareholder rent-seeking, resulting in discriminatory costs, as distinguished from agency costs. Acting as a proxy for long-term shareholder interests, the corporation-as-entity (corporate primacy) view is discussed as an alternative to shareholder primacy, militating against a distinct “discriminatory costs" problem in controlled jurisdictions. This approach overcomes the challenge of determining the long-term interests of the shareholder collective in liquid capital markets, without necessarily resorting to majoritarianism.

Keywords: Corporate law and governance, securities law, comparative corporate law, economic theory, controlling (concentrated) shareholders, agency (discriminatory) costs, oppression remedy, fiduciary duty, hostile takeovers, corporate primacy, shareholder primacy, stakeholder theory, team production

JEL Classification: G34, G38, K22, N22, D21, D23, G32, M14

Suggested Citation

Rojas, Claudio R., An Indeterminate Theory of Canadian Corporate Law (January 2014). University of British Columbia Law Review, Vol 47:1, 2014, Available at SSRN:

Claudio R. Rojas (Contact Author)

National Angel Capital Organization ( email )

101 College St
Suite 120G
Toronto, Ontario M5G 1L7


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