Law of Business Organization

Law of Business
Organization
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Table of Contents
Introduction................................................................................................................ 2
Summarization of current laws in British Columbia....................................................2
Difference between objective test and subjective test...............................................4
Change in the existing law......................................................................................... 5
Conclusion.................................................................................................................. 7
References................................................................................................................. 8

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Introduction
The primary objective of the paper is to summarize the current laws amended by the government
of British Columbia regarding the duties of directors or officers of the company. It will explain
the objective and subjective test and identify the laws that can be applied in British Columbia for
exercising the duties of directors. Business Corporation Act of business organization will be
described to represent the legal obligations of directors within the firm. Moreover, it will provide
advice to the local member of the legislative assembly to clear his confusion about the legal
obligations of directors that has been applied by the court in the past.
Summarization of current laws in British Columbia
The current law, as amended by the regime of British Columbia regarding the duties of directors,
is the Business Corporation Act. Under section 142 (1) of the act, the director of a firm must act
honestly as well as in good faith to the best interests of the organization when exercising powers
and performing his functions1. A director must also exercise care, skill and diligence that a
reasonable individual would exercise in similar situations. A director must act in accordance with
the Business Corporations Act and the relevant regulations. He or she must act in agreement with
the memorandum and articles of the corporation. Under section 142 (2) of the act, the duties and
liabilities of director of the firm must be enacted by the rule of law2. Under section 142 (3) of the
act, it is stated that no provision can discharge the director from performing his duty as per the
regulations and the act. Directors under the corporate laws are subject to legal duties in which he
is not permitted to act on his self-interest instead act as per the corporation’s interest3.
1 Roger Barker. "The duties and liabilities of directors-getting the balance right." The handbook of board
governance (2016): 249-269.
2 Kong Shan Ho. "Revisiting the Legal Capital Regime in Modern Company Law." The Journal of
Comparative Law 12, no. 1 (2017): 1-21.
3 Michael L Barnett. "The business case for corporate social responsibility: A critique and an indirect path
forward." Business & Society 58, no. 1 (2019): 167-190.