The Oppression Remedy – Part One

Who Can Assert the Remedy?

The oppression remedy is available to statutorily defined “complainants” under the Ontario Business Corporations Act (the “OBCA”) and the Canada Business Corporations Act (“CBCA”).

If you believe you may be a complainant, you need to check whether the corporation in question is an OBCA or CBCA corporation.

The oppression remedy is a broad remedy and is, as set out above, codified in statute (Section 248 of the OBCA; Section 241 of the CBCA).

“Complainant” is a defined term.  While defined, the list is not closed, meaning the court has discretion to find that parties not specifically mentioned have standing to bring an oppression claim.  Complainant is defined (in Section 245 of the OBCA) as a present or former shareholder, a present or former director or officer or any person deemed to have standing by a court.  Shareholder means both registered and beneficial.  In some cases, a creditor can qualify to be a complainant.

When is it Available?

The remedy affords a lesser alternative to an order winding up the corporation.  To receive a remedy, a complainant needs to prove oppressive, unfairly prejudicial or similar conduct of the corporation.

What is a Derivative Action?

A related remedy is the derivative action.  In a derivative action, the Plaintiff seeks leave (permission) of the Court to bring an action in the corporation’s name.  One example would be a claim for misappropriation or conversion of corporate funds by a director.  This is because misappropriation generally affects all or a subset of corporate stakeholders as a class, rather than distinctly affecting individual shareholders.

When is the Oppression Remedy Sought?

The oppression remedy is commonly brought in the context of a breakdown in relations between two or more shareholders.  It is often brought by a minority shareholder but not necessarily so.  Shareholders owning a plurality of shares can also bring the action.

How is the Proceeding Brought?

The proceeding can be brought by way of action or application.  In Toronto, it may be eligible for the Commercial List.  Formed in 1991, the Commercial List is a specialized court constituted for the resolution of commercial disputes.  It is comprised of a team of judges who have experience in managing complex commercial litigation.  Simply pleading oppression in an originating process (Statement of Claim or Application) will not entitle a party to have its matter proceed on the Commercial List.  The Court has discretion as to which cases it takes on, the guiding principle (beyond jurisdiction) being complexity.

Who Can Represent You?

If you are of the view that your interests as a shareholder or otherwise have been oppressed, prejudiced or unfairly disregarded, consider hiring a commercial litigator to assist you.  I have been practicing in this area in 1996 and I can also assist you if you are the Respondent or Defendant to such a proceeding.

If you wish to learn more about partnerships and the arrangement most tailored to your business plan, contact our office today for your free initial consultation.

We look forward to hearing from you.

The above is not to be construed as legal advice.

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