Are you a minority shareholder being unfairly treated by the majority shareholders or the corporation? Are you being forced out of a company by the majority shareholders and need some protection? There is a vast area of law governing shareholder rights. The Ontario Business Corporations Act (OBCA) and the Canada Business Corporations Act (CBCA) sets out the statutory framework for corporations and their officers, directors and shareholders. In particular, the oppression remedy referred to within these acts can be utilized by minority shareholders to prevent a majority shareholder or corporation from trampling on the rights of a minority shareholder. A minority shareholder can seek a court order restraining the conduct that they are complaining of. The court can compel the corporation or majority shareholder to act in a certain way. The court can even dissolve the corporation and liquidate it. In certain cases, a court can even pierce the corporate veil which means that a director can be found personally liable instead of just the corporation.
Sometimes business partners do not have a shareholders agreement that defines their respective rights and ownership interests. Perhaps they meant to have one but got too busy to ever finalize it. This has happened many times, even with successful companies. If a dispute later arises between business partners and there is no shareholders agreement, then the court will have to decide the parties’ respective ownership interests. Numerous factors could be involved in this decision, including the court reviewing emails, memorandums or oral discussions the parties originally had with respect to their roles and respective ownership interests. The court will have to piece together the corporate structure based on evidence that is not a shareholders agreement. Crangle has successfully argued on behalf of a party that had an ownership interest in a corporation even though there was never any shareholder agreement.
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