Special committees have increasingly been used by corporate boards since they first emerged during the wave of M&A activity in the 1980s as a way to manage conflicts of interests. Special committees, which are typically subcommittees of an entity’s board comprised of independent directors and formed for a specific and time-limited purpose, serve as procedural safeguards and can be critical tools in ensuring that boards fulfill their legal duties and mitigate litigation and other risks. In this chapter, we explore when special committees can or should be used in the transactional context and in other high-stakes situations and how best to define their mandates. We also provide practical guidance on how, once established, they can most effectively carry out their mandates.

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This chapter appears in the 2020 edition of Davies Governance Insights, our comprehensive annual report on the trends and issues most important to Canadian public companies.

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