The law of directors’ duties in Canada has traditionally not been very concerned with creditors’ interests. In the context of corporations who are nearing insolvency, the prevailing view is that the directors owe their fiduciary duty to the company as a whole. That of course begs the question of “who is the company?” Other Commonwealth countries have developed significant protections for creditors and with the Supreme Court of Canada decision in Peoples v. Wise, Canada has effectively caught up and surpassed other countries in this regard. The decision made clear that directors of a financially unstable company owe a duty to other stakeholders in the corporation besides shareholders, but this duty is not fiduciary in nature. In addition, the oppression remedy, located in the Canada Business and Corporations Act, is ample means by which creditors interests will receive protection, while it also ensures that directors’ discretionary decisions will not be subject to unlimited liability.
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Carina Neumueller, "A Canadian Solution: Recent Developments in the Law of Directors' Duties in the Context of Financially Distressed Corporations" (2005) 14 Dal J Leg Stud 90.