Can a minority shareholder demand their own valuation before a sale?

A minority shareholder who suspects a sale is underpriced may want a valuation before anything is signed. The provisions below work differently. One pays fair value to a shareholder who dissents from certain resolutions and follows the procedure. The other lets a court review conduct. Neither is framed as a right to demand a valuation beforehand. The rules differ by statute, so first confirm whether the company is federal, Ontario or incorporated elsewhere.

Dissent: fair value after the vote

Under s.190(1) of the Canada Business Corporations Act, subject to ss.191 and 241, a shareholder may dissent if the corporation resolves to do one of the listed things, including selling, leasing or exchanging all or substantially all its property under s.189(3). A shareholder who follows the procedure is entitled to be paid the fair value of the shares, set as of the close of business on the day before the resolution was adopted, subject to the solvency limit in s.190(26). Ontario’s OBCA has its own version in s.185. The dissent rights answer covers the steps.

Oppression: a court decides the remedy

Under s.241 of the CBCA, a complainant may apply to court. If the court is satisfied that conduct is oppressive or unfairly prejudicial to, or unfairly disregards, the interests of any security holder, creditor, director or officer, it may make any interim or final order it thinks fit. That can include directing the corporation or another person to purchase a security holder’s securities, subject to the payment limit in s.241(6). Ontario’s equivalent is s.248 of the OBCA. The application starts a court process; it does not hand the shareholder a valuation.

What the agreement and your own report add

The CBCA entitles a shareholder, on request and without charge, to one copy of the articles, by-laws and any unanimous shareholder agreement. Look there for a valuation clause, a buy-sell mechanism or consent rights over a sale. A valuation you commission yourself gives you one valuator’s view to compare with the price on offer. If a dissent reaches court on an application under s.190(15) or (16), the court fixes fair value under s.190(20) and may appoint appraisers to help, under s.190(21). BDC lists asset-based, market-multiple and discounted cash flow approaches, so ask which one any valuation used.