Can minority shareholders demand to see the buyer’s offer before deciding?

Two different questions sit inside this one. Shareholders have a statutory right to inspect certain corporate records. On the sections cited here, they do not have a general right to a buyer’s offer before the directors or the majority owners decide how to respond. What a minority holder is owed depends on what is being sold: the company’s own business, or the owners’ shares.

What the records right covers

Under the Canada Business Corporations Act (CBCA), shareholders may examine the records described in s.20(1) during the corporation’s usual business hours and take extracts free of charge (s.21(1)). Those records include the articles, the by-laws, any unanimous shareholder agreement, and the minutes of meetings and resolutions of shareholders. Corporations Canada also lists financial statements and directors’ reports among what a shareholder can examine and copy. Ontario’s Business Corporations Act (OBCA) gives registered holders and beneficial owners a similar right in s.145(1). Read the full list in your own statute before assuming an offer letter is in it. A corporation formed in another province follows that province’s Act.

When the company itself is the seller

If a CBCA corporation sells all or substantially all of its property outside the ordinary course of business, shareholders must approve it (s.189(3)). The notice of meeting goes to each shareholder, must include or be accompanied by a copy or summary of the agreement of sale, and must state the dissent right (s.189(4)). Every share carries a vote on that resolution, whether or not it otherwise carries one (s.189(6)), and the sale is adopted when the holders of each class or series entitled to vote approve it by special resolution (s.189(8)). Ontario sets a parallel approval and notice rule in OBCA s.184(3)–(4). The related page on selling without telling the minority covers the notice duty in more detail.

When the owners are selling their shares

A buyer’s offer for the majority owners’ shares is not a sale of the corporation’s property, so the s.189 notice rule does not by its terms apply. Corporations Canada notes that share transfers must conform to any conditions or restrictions that apply to the shares and their transfer, and gives the example that directors could have to approve all transfers. Check the shareholder agreement for notice, consent or tag-along terms. If one exists, it can give a minority holder more than the Act does; Corporations Canada notes, for example, that an agreement can require unanimous approval to sell the business.

If a minority holder says they are being kept in the dark

A complainant may ask a court for an order where the corporation’s acts, its business or affairs, or the directors’ use of their powers are oppressive or unfairly prejudicial to, or unfairly disregard, the interests of any security holder, creditor, director or officer (CBCA s.241(1)–(2)). OBCA s.248 is the Ontario equivalent. The court may make any order it thinks fit, and the outcome turns on the facts. As a seller, decide early what you will share and under what confidentiality terms, and take advice before a request turns into a dispute.