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19 Can. Bus. L.J. 86 (1991)
The Puzzle of Shareholder Fiduciary Duties

handle is hein.journals/canadbus19 and id is 114 raw text is: THE PUZZLE OF SHAREHOLDER FIDUCIARY DUTIES Jeffrey G. Macintosh with Janet Holmes and Steve Thompson * 1. Introduction In England and Canada the courts have in the main clung stead- fastly to the notion that controlling shareholders owe no fiduciary duties, either to the company, or to fellow shareholders.1 This is in marked contrast to developments in the United States, where it has been clear, at least since the holding of the United States Supreme Court in Pepper v. Litton2 in 1939, that majority or controlling shareholders bear fiduciary responsibilities towards the minority. Indeed, it is possible to discover American cases dating from the 1880s that hold that shareholders are trustees or fiduciaries towards the minority,3 and many more from the 1890s *Professor Macintosh is with the Faculty of Law, University of Toronto. Janet Holmes and Steve Thompson are both LL.B. 1991 (Toronto). Janet Holmes is articling with Osler, Hoskin & Harcourt, and Steve Thompson is articling with Blake, Cassels & Graydon. 'See, e.g., Brant Investments Ltd. v. KeepRite Inc. (1987), 60 O.R. (2d) 737, 42 D.L.R. (4th) 15, (H.C.J.), supplementary reasons, 61 O.R. (2d) 469,43 D.L.R. (4th) 141; Exco Corp. Ltd. v. Nova Scotia Savings & Loan Co. (1987), 78 N.S.R. (2d) 91, 35 B.L.R. 149 (S.C.); Bell v. Source Data Control Ltd. (February 12,1986, Ont. H.C.J.), summarized in 39 A.C.W.S. (2d) 62, affd (1988), 66 O.R. (2d) 78,53 D.L.R. (4th) 580 (C.A.); Roberts v. Pelting (1981), 130 D.L.R. (3d) 761, 16 B.L.R. 150 (B.C.S.C.), sub nom. Pelling v. Pelling. See also Trimac Ltd. v. C-I-L Inc., [199011 W.W.R. 133,99 Alta. L.R. (Q.B.), in which Shannon J. found on the facts that one 50% shareholder did not owe a fiduciary duty to the other 50% shareholder, as their relationship was completely determined by the contract between them. Shannon J. did not rule out finding such a fiduciary duty on the appropriate facts. See also QMG Holdings Inc. v. Kerr Addison Mines Limited and Agnew Lake Mines Ltd. (December 20, 1982, Ont. S.C.). There are notable exceptions, which are reviewed at some length in Jeffrey G. Macintosh, Fiduciary Responsibilities of Shareholders, Law Society of Upper Canada Special Lecture Series, Fall 1990, and Jeffrey G. Maclntosh, Minority Shareholder Rights in Canada and England: 1860-1987 (1989), 27 Osgoode Hall L.J. 561. 2 308 U.S. 295 (1939), infra, notes 197 to 199 and accompanying text. In fact, there are earlier indications that the Supreme Court recognized fiduciary duties. See Southern Pacific Co. v. Bogart, 250 U.S. 483 at pp. 487-8, 39 Sup. Ct. 533 (1919), in which Mr. Justice Brandeis said: The majority has the right to control; but when it does so, it occupies a fiduciary relation toward the minority, as much so as the corporation itself or its officers or directors. 3 See, e.g., Meeker v. Winthrop Iron Co., 17 Fed. 48 (6th Cir., 1883); Ervin v. Oregon Ry. & Nay. Co., 27 Fed. 625 (2d Cir., 1886); Barr v. New York (1884), 96 N.Y. 444.

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