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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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