Do shareholders have dissent rights when a company sells its assets?

A company can sell its assets without selling its shares, but when the sale covers all or nearly all of what it owns, corporate law treats it as a fundamental change that the shareholders must approve. Dissent rights are the safeguard for a shareholder who is outvoted: they allow that person to leave the company and be paid the fair value of their shares.

When the right arises

Under the Canada Business Corporations Act, a sale, lease or exchange of all or substantially all of a corporation’s property, other than in the ordinary course of its business, requires shareholder approval by special resolution. Every share carries a vote on that sale, even a share that does not normally vote. The meeting notice must state that a dissenting shareholder is entitled to be paid fair value, although leaving the statement out does not invalidate the sale.

What dissenting involves

A dissenting shareholder must send the corporation a written objection at or before the meeting, and may claim only for all the shares of a class held for one beneficial owner. When the approved action takes effect, the shareholder is entitled to be paid the fair value of those shares. The Act sets out the steps in detail, so a shareholder who means to dissent should take advice before the meeting rather than after the vote.

What dissent does not do

Dissent does not give a veto. If the required vote passes, the sale can proceed, and what the dissent right gives the shareholder is payment of fair value, not the power to block the deal. For the owner-manager planning a sale, that means a minority holder cannot stop it by dissenting, but the company may have to fund a payout.

Which statute governs

The federal Act applies to corporations incorporated or continued under it. A company formed under a provincial or territorial statute follows that statute, so check the law under which yours was formed. Dissent is not limited to asset sales: the Act also requires the fair-value statement in notices for amalgamations, and Corporations Canada’s guide notes that a long-form amalgamation goes to a shareholder meeting.