Can a shareholder go to court to enforce a unanimous shareholder agreement?

This page covers the compliance application, not an oppression claim. Under CBCA s. 122(2), every director and officer of a corporation must comply with the Act, the regulations, articles, by-laws and any unanimous shareholder agreement.

The CBCA compliance order

Under the CBCA, where a corporation or a director, officer, employee, agent, auditor, trustee, receiver, receiver-manager, sequestrator or liquidator does not comply with the Act, the regulations, articles, by-laws or a unanimous shareholder agreement, a complainant or a creditor may apply to a court for an order directing compliance or restraining a breach. On that application the court may so order and make any further order it thinks fit.

Who counts as a complainant

Under the CBCA, a complainant includes a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates. It also covers a director or officer, or a former director or officer, of a corporation or any of its affiliates, and the Director. A complainant also includes any other person who, in the discretion of a court, is a proper person to make an application under that Part.

The Ontario version

Under Ontario’s OBCA, where a corporation or any shareholder, director, officer, employee, agent, auditor, trustee, receiver and manager, receiver or liquidator does not comply with the Act, the regulations, articles, by-laws or a unanimous shareholder agreement, a complainant or a creditor may apply to the court for an order directing compliance or restraining a breach. In Ontario, the court may so order and make any further order it thinks fit. Under Ontario’s OBCA, a complainant includes a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates. In Ontario, a complainant also includes any other person who, in the discretion of the court, is a proper person to make an application under that Part.

What counts as a unanimous shareholder agreement

The CBCA defines a unanimous shareholder agreement as an agreement described in subsection 146(1) or a declaration of a shareholder described in subsection 146(2). Ontario’s OBCA defines it as an agreement described in subsection 108(2) or a declaration of a shareholder described in subsection 108(3).

Ask a lawyer whether you can apply on your facts. For the other route, see how a shareholder buyout works when business partners split up.