Oppression Remedy Laws and Available Solutions

Oppression remedy laws and available solutions can provide relief to individuals or companies facing unfair or oppressive treatment.

A court may grant an oppression remedy in situations where a shareholder or member is being treated unfairly or is being excluded from decision-making processes.

In some cases, an oppression remedy can be used to buy out the shares of a minority shareholder who is being treated unfairly.

The oppression remedy can be a powerful tool for protecting the rights of shareholders or members.

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The Oppression Remedy is governed by specific laws, which vary depending on whether you're dealing with a provincial or federal corporation. In Ontario, the relevant law is the Ontario Business Corporations Act.

Section 248 of the Ontario Business Corporations Act outlines the Oppression Remedy provisions, while section 241 of the Canada Business Corporations Act contains a similar provision. This means that the law you use will depend on the type of corporation you're dealing with.

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The Oppression Remedy is defined in section 248(2) of the Ontario Business Corporations Act as a situation where an act or omission of a corporation or its affiliates has a negative impact on a security holder, creditor, director, or officer.

A court may order a corporation to produce financial statements or an accounting if it finds that the corporation's actions are oppressive or unfairly prejudicial. This can be a powerful tool for individuals who have been harmed by a corporation's actions.

The court has a range of options available to it, including ordering a corporation to produce financial statements or an accounting, winding up the corporation, or directing an investigation.

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The court has a wide discretion to grant any interim or final order it thinks appropriate to remedy oppressive conduct. This means that the court can make a variety of orders to address the situation.

Some examples of orders that the court can make include restraining or prohibiting certain actions or conduct, appointing a receiver, regulating the company's affairs, directing an issue or exchange of shares, and ordering the company to produce financial statements within a specified time period. The court's discretion to grant relief must be exercised with a view to remedying the conduct found to be oppressive.

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The Supreme Court of Canada has articulated guiding principles for the court's approach in making an interim or final order in an oppression action, including that the oppression remedy request must be a fair way of dealing with the situation, and that any order should go no further than necessary to rectify the oppression.

Here are some specific examples of relief that the court can grant:

A derivative action is a type of claim that allows a shareholder to bring a lawsuit on behalf of the corporation to address a situation where the corporation's directors or management are not acting in the best interests of the company.

The goal of a derivative action is to correct the unfairness and restore balance between the parties, just like an oppression remedy claim.

In a derivative action, the court has wide discretion when granting remedies and can make any order it sees fit, including restraining the conduct that caused the issue, ordering the purchase or sale of shares, or amending corporate documents.

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Some common remedies in a derivative action include restraining the conduct that caused the issue, ordering the purchase or sale of shares, amending corporate documents, appointing a receiver or receiver-manager, awarding financial compensation, requiring disclosure of records or audited financials, and in rare cases, winding up the corporation.

Here are some specific examples of remedies that a court can grant in a derivative action:

Eligible claimants can include minority shareholders, directors, officers, security holders, creditors, and anyone else the court deems proper.

The oppression remedy is most commonly used by minority shareholders, but it's not limited to them. Any individual or group can bring a claim if the court agrees it's justified.

It's essential to understand that meeting the definition of a complainant doesn't guarantee success in court. A claim can still be dismissed, even if it's brought by someone who technically qualifies.

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The court has a wide discretion to grant any interim or final order it thinks appropriate to remedy oppressive conduct. This discretion is not limited to specific examples, but can include a range of orders to address the situation.

Some common remedies include restraining the conduct that caused the oppression, ordering the purchase or sale of shares, and awarding financial compensation. The court may also require disclosure of records or audited financials.

The remedy will always be tailored to the situation and go no further than necessary to protect shareholder rights. In some cases, this may involve directing the company to produce financial statements within a specified time period.

The court's discretion is informed by the equitable nature of the remedy and its remedial purpose. In making an order, the court should focus on rectifying the oppressive conduct without going further than necessary.

Some specific examples of relief that can be granted include:

The court's discretion in granting an appropriate remedy in an oppression action is guided by the following principles:

In Ontario, the Business Corporations Act provides additional examples of relief that can be granted, including directing any act, directing conversion of shares, removing any director, and reducing a company's capital.

The oppression remedy process involves filing an application or statement of claim against the corporation and those responsible for the oppressive conduct. This is usually done by a shareholder who has had their reasonable expectations violated.

The court has a wide discretion to grant any interim or final order it considers appropriate to remedy oppressive conduct. The court's discretion is informed by the equitable nature of the remedy and its remedial purpose.

Evidence must clearly demonstrate how the shareholder's reasonable expectations were violated. This can be a technical and fact-specific process, making legal representation highly recommended.

The court's discretion to grant relief must be exercised with a view to remedying the conduct found to be oppressive. The court should focus only on rectifying the oppressive conduct without going further than necessary.

Some common remedies include restraining the conduct that caused the oppression, ordering the purchase or sale of shares, and awarding financial compensation. The remedy will always be tailored to the situation and go no further than necessary to protect shareholder rights.

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The following are some examples of orders a court can make in an oppression remedy case:

These lists do not restrict the court's discretion to make any other order it considers appropriate.

In British Columbia, oppression claims must be brought in a timely manner, which requires a fact-driven analysis on a case-by-case basis.

The two-year limitation period starts to run when the oppressive conduct is discovered, and the clock starts running from that date, even if the conduct is continuing.

A delayed filing of an oppression action may render it statute-barred or non-compliant with the necessary statutory conditions.

There is a 2-part test in determining whether an Oppression Remedy Claim will succeed: establishing a breach of reasonable expectation and determining if the conduct complained of amounts to oppression, unfair prejudice, or unfair disregard.

The test for oppression is fact-specific, and what is just and equitable is judged by the reasonable expectations of the stakeholders in the context and in regard to the relationships at play.

Here are the factors that are useful in determining whether a reasonable expectation exists:

In British Columbia, timing is crucial when it comes to filing an oppression action. A delayed filing may render it statute-barred or non-compliant with necessary statutory conditions.

The courts have provided guidance on what constitutes a timely filing, with the key factor being whether the oppressive conduct is continuing or has continuing effects. This was established in the case of Runnalls v. Regent Holdings Ltd.

The two-year limitation period starts to run when the oppressive conduct is discovered, not when it stops. This means the clock begins ticking as soon as the petitioner knows or reasonably ought to know that their reasonable expectations are being breached.

A continuing oppressive act does not reset the limitation period in British Columbia, unlike in other provinces. The court proceeding must be commenced no more than two years from the date on which the claim is discovered.

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The Test for Oppression Remedy Claims is a crucial part of determining whether a claim will succeed. It's a two-part test that was outlined in BCE Inc. v. 1976 Debentureholders, 2008 SCC 69 (CanLII), [2008] 3 SCR 560.

To establish a breach of reasonable expectation, you must first show that your reasonable expectation was violated. This is a subjective expectation that you must establish, and then the court will conduct an objective analysis to determine if those expectations are reasonable.

The court will consider various factors to determine if your expectations are reasonable, including general commercial practice, the nature of the corporation, the relationship between the parties, past practice, steps you could have taken to protect yourself, representations and agreements, and the fair resolution of conflicting interests between corporate stakeholders.

A breach of reasonable expectation is not the only requirement for an oppression remedy claim to succeed. The conduct complained of must also amount to oppression, unfair prejudice, or unfair disregard of a relevant interest.

Here are the three grounds for an oppression remedy claim:

Oppression is a fact-specific remedy, and what is considered oppressive in one situation may not be in another. The court will balance all the facts to determine what is just and equitable in the circumstances.

Oppression remedy claims are most often seen in small privately held companies where a majority shareholder begins disregarding or harming the rights of minority shareholders.

A public company with a total share value in excess of $1 billion has a Director who siphons $25 million in funds from a project involving development of low-income housing. This is an example of using corporate funds or resources for personal gain, a classic case of shareholder oppression.

Courts have found conduct to be oppressive in the following situations:

In some cases, courts have declined to find that the conduct complained of was oppressive, such as when a shareholder agreement does not suggest that the shareholder’s involvement in management would be permanent.

A company releasing additional Class Z shares, diluting the value of shares held by an executive, is an example of a personalized claim that may be available as an oppression remedy.

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The court has a wide discretion to grant any interim or final order it thinks appropriate to remedy oppressive conduct. This can include restraining or prohibiting certain actions or conduct.

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The BCBCA and CBCA provide specific examples of orders a court can make, such as appointing a receiver, regulating the company's affairs, or directing an issue or exchange of shares. These lists do not restrict the court's discretion.

A court's discretion to grant relief must be exercised with a view to remedying the conduct found to be oppressive. The court's discretion is informed by the equitable nature of the remedy and its remedial purpose.

The Supreme Court of Canada has articulated guiding principles for making an interim or final order in an oppression action. These include ensuring the oppression remedy request is a fair way of dealing with the situation and that any order goes no further than necessary to rectify the oppression.

Experienced corporate and commercial litigation lawyers can assess whether the oppression remedy applies to your situation, collect and present evidence effectively, and represent you in court if litigation is required.

Some potential remedies available under the oppression remedy include:

If you are a minority shareholder or other claimant that believes your rights are being oppressed, you should seek the assistance of an oppression remedy lawyer.

A shareholder of a BCBCA company can apply for an oppression remedy under section 227, which allows the court to consider other persons as well. This includes creditors, people who claim to own shares, former shareholders, and security holders.

The court has broad discretion to determine who is a proper complainant, but in British Columbia, this is less common than in other jurisdictions like Ontario. To be considered an "appropriate person", the applicant must demonstrate that they should be afforded the benefit of the remedy to achieve justice and equity.

A complainant in a CBCA company can also include a current or former director or officer, the Director appointed under the Act, and any other proper person. The oppression remedy can be triggered by conduct that is oppressive, unfairly prejudicial, or unfairly disregards a relevant interest.

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BCBCA companies are governed by section 227 of the BCBCA, which allows shareholders and other specified individuals to apply for an oppression remedy. This remedy is designed to achieve justice and equity in a particular case.

In determining whether an applicant is an "appropriate person", the court considers whether they should be afforded the benefit of the remedy. Examples of complainants considered to be appropriate persons include:

Applicants may seek the oppression remedy based on one of two grounds: if the company's affairs are being conducted in a manner oppressive to shareholders, or if some act or resolution has been passed that is unfairly prejudicial to shareholders.

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A CBCA company is governed by the Canada Business Corporations Act, which defines a complainant as a current or former registered or beneficial owner of a security, a current or former director or officer of the corporation, the Director appointed under the Act, or any other person who is a proper person.

The Act also includes an additional trigger of conduct that unfairly disregards, which is distinct from oppressive conduct. Oppressive conduct is considered a wrong of the most serious sort, characterized as burdensome, harsh, or wrongful.

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Under the CBCA, a complainant may apply for an oppression remedy, which is used to restore fairness in situations where majority shareholders or directors abuse their power. The remedy is not limited to shareholders and can be applied by creditors, individuals who allege to own shares, or former shareholders.

To determine whether an applicant is an "appropriate person", the court considers whether they should be afforded the benefit of the remedy to achieve justice and equity in the circumstances of the case. Examples of complainants considered to be appropriate persons include shareholders, creditors, security holders, and former shareholders.

The court has broad discretion to determine who is a proper complainant, but in British Columbia, oppression claims by entities other than shareholders are less common than in other jurisdictions, such as Ontario.

A complainant may apply for the oppression remedy based on one of two grounds: