Fiduciary Duty

• Author: Cheryl Foy
• Pages: 13-17

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Fiduciary Duty

If you’ve held a leadership role or engaged in any board training at all, you

will understand that board members have two primary legal duties: () a

duciary duty, and () a duty of care.

A. UNDERSTANDING FIDUCIARY DUTY

Fiduciary duty is a duty of loyalty to the corporate entity. It’s a duty that

arises in Canadian corporate legislation and likely makes an appearance

either explicitly or implicitly in your university’s governing legislation,

bylaws, and policies. A duciary holds the highest trust obligation at law.

When I was in law school, one of my professors asked my class to think of

the corporate entity as a vulnerable little baby. Bear with me as I explain!

e duciaries are those board members and senior leaders entrusted with

the care of the baby, acting in the interests of the baby, serving the baby

with honesty and good faith, putting the baby’s interests before their own,

and pledging loyalty. e baby analogy illustrates the degree of vulnerabil-

ity of a corporate entity that must act through the humans entrusted with

its care and leadership.

Lawyers who oer training on duciary duty will often explain the

concept by reference to cases. A favourite is BCE v 1976 Debentureholders.

is case is so often referenced because it is an important case in which the