Oppression remedy

The oppression remedy is a statutory route into court for a complainant who says the way a corporation is run is oppressive or unfairly prejudicial to, or unfairly disregards the interests of, a security holder, creditor, director or officer. Before buying shares, it is worth asking whether any such application has been made or threatened against the company. It sits alongside dissent rights.

How the federal statute frames it

Under the Canada Business Corporations Act, a complainant may apply to a court for an order. Section 241 looks at whether an act or omission of the corporation or its affiliates, the way their business or affairs are carried on, or the way the directors’ powers are exercised, is oppressive or unfairly prejudicial to, or unfairly disregards the interests of, a security holder, creditor, director or officer. If so, the court may make an order to rectify the matters complained of. Under section 238, a complainant means a current or former registered holder or beneficial owner of a security of the corporation or its affiliates, a current or former director or officer, the Director appointed under the Act, or any other person the court considers a proper person to apply.

It differs by province

Ontario’s Business Corporations Act, in section 248, and Alberta’s Business Corporations Act, in section 242, each contain their own oppression provision with similar wording. Other provinces and territories have their own statutes, so check which Act the corporation was incorporated under. The buyout remedy answer shows how a dispute can end.

What to check or ask

• Whether any current or former shareholder or creditor has complained about how the company has been run
• Whether past share issuances and payments to related parties are documented and approved
• What the shareholder agreement says about exits and minority holders