A lot goes into running a business smoothly. Based on how big your operation is, that can be a tall order. Luckily, there are systems in place to help you and your shareholders, creditors, directors or officers ensure your rights are protected.
The Canada Business Corporations Act was designed by Parliament to do exactly that, by regulating Canadian business corporations. One major part of this act is section 241 – the oppression remedy.
Oppression remedy explained
The idea of treating everyone in your corporation with respect is more than just about being nice or courteous. Oppression remedy exists to help give anyone at the table a voice if they feel their rights are being dismissed or taken for granted.
Section 241 of the CBCA gives a "complainant" the right to bring a court action against a corporation where conduct has occurred which is oppressive, unfairly prejudicial or which unfairly disregards the interests of a shareholder, creditor, director or officer. 1
It’s also important to note here that the oppression remedy under section 248 of the Ontario Business Corporation Act (OBCA) is similar to section 241 of the Canada Business Corporation Act (CBCA). However, the OBCA applies to corporations incorporated under the laws of Ontario whereas the CBCA applies to corporations incorporated under the federal law.
Simply put, there are ways to fight back if you are being treated unfairly when you are more than just an employee of a business. We’ve found a few examples from previous cases to help give you a better understanding of what to expect.
Identifying oppression remedy
Everyone’s tolerance and understanding of things can vary based on the person. While some might be very aware of their rights, others might just think it’s a part of “paying their dues”. So how do you know if oppression remedy is something that might apply to your situation?
Here are a few times where applications to court were successful.2
There was lack of a valid corporate purpose for the transaction;
The corporate and its controlling shareholders failed to take reasonable steps to simulate an arm's length transaction;
There was lack of good faith on the part of the corporation's directors;
There was discrimination among shareholders which benefited the majority to the exclusion of the minority;
There was a lack of adequate and appropriate disclosure of material information to minority shareholders; and
There was a plan to eliminate a minority shareholder.
Don’t face oppression remedy alone. Sicotte Guilbault is here to help
As previously mentioned, everyone’s understanding of their own rights varies based on the individual. Our Litigation and Dispute Resolution Team is here to assist in determining if oppression remedy is the appropriate course of action in your situation to protect your interests in the corporation. Give us a call at (613) 837-7408 to get started by speaking to a member of our team. Rest assured, you should never have to navigate the deep waters of corporate law alone, and with our team on your side, you never will.
1 – Oppression remedy guidelines – Canada Business Corporations Act - https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs02883.html
2 – Ben-Ishai, Stephanie; Puri, Poonam (2004). "The Canadian Oppression Remedy Judicially Considered: 1995–2001". Queen's Law Journal. 30: 79–114. SSRN 1427819.