The Oppression Remedy In Shareholder Disputes

The oppression remedy allows a shareholder to bring an action against a corporation with which it has a dispute. Under the Canada Business Corporations Act (CBCA), shareholders have the right to bring a court action if the treatment they received was considered oppressive or unfairly prejudicial.

 

What Is Oppressive or Unfairly Prejudicial Conduct?

When a court looks at an organization’s conduct towards a shareholder who has brought an application, it examines whether:

  • The business has done or failed to do something for the shareholder
  • That the conduct of the business unfairly disregarded the interests of the shareholder
  • The organization carried on business without regard to the interests of the shareholder

The court will basically examine whether or not the shareholder received fair treatment by the organization. If the court finds that the shareholder was treated in an unfair manner, it will make an order to mitigate the situation.

What are the possible orders a court can issue?

Under the CBCA, the court is given broad powers to issue remedies if oppressive conduct was found.

The court can make orders that:

  • Set aside or vary a contract or transaction
  • Require the business to pay the shareholder for his or her shares
  • Dissolves or liquidates the company
  • Requires the business to produce its financial records
  • Restricts the conduct of the business or orders the business to do something

When the court orders a remedy, it will ensure not just to rectify the situation but also to find a remedy that is fair to all parties.

Businesses who face a shareholder dispute should seek the advice of a corporate lawyer.

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