BCE Inc. v. 1976 Debentureholders
| BCE Inc v 1976 Debentureholders | |
|---|---|
|
|
| Hearing: 2008-06-17 Judgment: 2008-06-20 |
|
| Citations | 2008 SCC 69; [2008] 3 SCR 560; 301 DLR (4th) 80; 52 BLR (4th) 1; 71 CPR (4th) 303 |
| Docket No. | 32647 |
| Prior history | APPEALS and CROSS‑APPEALS from judgments of the Quebec Court of Appeal (Robert C.J.Q. and Otis, Nuss, Pelletier and Dalphond JJ.A.), 2008 QCCA 934 (CanLII), setting aside decisions by Silcoff J., 2008 QCCS 907 (CanLII) |
| Ruling | Appeals allowed and cross‑appeals dismissed. |
| Holding | |
| Under the CBCA, the s. 241 oppression action and the s. 192 requirement for court approval of a change to the corporate structure are different types of proceedings, engaging different inquiries. | |
| Court Membership | |
| Chief Justice | McLachlin C.J. |
| Puisne Justices | Bastarache, Binnie, LeBel, Deschamps, Abella and Charron JJ. |
| Reasons given | |
| Unanimous reasons by | The Court |
| Bastarache J. took no part in the consideration or decision of the case. | |
| Laws Applied | |
| Canada Business Corporations Act | |
BCE Inc v 1976 Debentureholders, 2008 SCC 69 (CanLII), [2008] 3 SCR 560 is a leading decision of the Supreme Court of Canada on the nature of the duties of corporate directors to act in the best interests of the corporation, "viewed as a good corporate citizen". This case introduced the principle of fair treatment as an organizing principle in Canadian corporate law.
BCE Inc. was the subject of multiple offers involving a leveraged buyout, for which an auction process was held and offers were submitted by three groups. All three offers contemplated the addition of a substantial amount of new debt for which Bell Canada, a wholly owned subsidiary of BCE, would be liable. One of the offers, which involved a consortium of three investors, was determined by BCE's directors to be in the best interests of BCE and BCE’s shareholders. This was to be implemented by a plan of arrangement under s. 192 of the Canada Business Corporations Act, which was approved by 97.93% of BCE’s shareholders, but was opposed by a group of financial and other institutions that held debentures issued by Bell Canada. These debentureholders sought relief under the oppression remedy under s. 241 of the CBCA. They also alleged that the arrangement was not “fair and reasonable” and opposed s. 192 approval by the court. Their main complaint was that, upon the completion of the arrangement, the short‑term trading value of the debentures would decline by an average of 20 percent and could lose investment grade status.
Silcoff J. of the Superior Court of Quebec approved the arrangement as fair and dismissed the claim for oppression.
On appeal, the Quebec Court of Appeal held:
BCE and Bell Canada appealed the overturning of the trial judge’s approval of the plan of arrangement, and the debentureholders cross‑appealed the dismissal of the claims for oppression.
In a unanimous decision, the SCC ruled that the appeals should be allowed and the cross‑appeals dismissed. In summary, it held that the s. 241 oppression action and the s. 192 requirement for court approval of a change to the corporate structure are different types of proceedings, engaging different inquiries. The Court of Appeal’s decision rested on an approach that erroneously combined the substance of the s. 241 oppression remedy with the onus of the s. 192 arrangement approval process, resulting in a conclusion that could not have been sustained under either provision, read on its own terms.
...
Wikipedia