The Directors’ Duty of Care – Not a Fiduciary Duty of Care

Abstract

This article addresses the question whether directors’ duty of care is a fiduciary duty. In Delaware and throughout much of the United States, courts and practitioners describe directors’ duty of care as a fiduciary duty. By contrast, Canada and most other common law jurisdictions do not describe directors’ duty of care as a fiduciary duty. Two recent decisions by the Supreme Court of Canada suggest a move by Canadian courts towards recognizing a fiduciary duty of care. In response to these decisions, this article argues that styling directors’ duty of care as a fiduciary duty is not persuasive in the Canadian context. Through a comparative analysis of corporate law in Canada and the United States, this article demonstrates that the Delaware approach to styling directors’ duty of care misconstrues the boundaries of fiduciary law. Furthermore, the Delaware approach obfuscates the important distinction between the duty of care and fiduciary duty of loyalty. In response to these concerns, the article recommends amendments to s.122 of the Canada Business Corporations Act, which identify the important distinction between directors’ duty of care and the fiduciary duty of loyalty.

Keywords: [Duty of Care, Fiduciary Duty, Corporate Law, Delaware, Canada]