Legal Matters: What is the oppression remedy?

This article was originally published by The Hamilton Spectator.
 

The Ontario Business Corporations Act (“OBCA”) and the Canada Business Corporations Act (“CBCA”) afford various rights to the shareholders of a corporation. If a shareholder’s rights are breached, it can turn to the OBCA or the CBCA for a variety of legal remedies.

Under section 248 of the OBCA and section 241 of the CBCA, the oppression remedy is available to address harm caused to the legal and equitable interests of stakeholders in instances when:

(a) any act or omission of the corporation or any of its affiliates effects or threatens to effect a result;

(b) the business or affairs of the corporation or any of its affiliates are, have been or are threatened to be carried on or conducted in a manner; or,

(c) the powers of the directors of the corporation or any of its affiliates are, have been or are threatened to be exercised in a manner; that is oppressive, unfairly prejudicial, or unfairly disregards the interest of any shareholder, creditor, director or officer of the corporation.

This section is broad in nature and the Court has a large amount of judicial discretion in its application. The Court’s decision will be based on the circumstances of each case and it can order a variety of remedies, including: appointing a receiver, setting aside a transaction or contract, amending a unanimous shareholder agreement, or winding up the corporation.

The oppression remedy can be a useful tool in protecting a shareholder’s legitimate and reasonable expectations. It can be especially helpful in protecting minority shareholders. You should speak with a commercial litigator to determine if your situation warrants the application of the oppression remedy.

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Greta Ladanyi
Greta Ladanyi
P: 905.667.6402
gladanyi@rossmcbride.com