STRATEGIC ADVOCACY FOR BUSINESS DISPUTES – TORONTO BUSINESS LITIGATION LAWYERS
Toronto Shareholders Disputes Lawyers
Shareholders Litigation Lawyers in Ontario
Shareholder Remedies Lawyers
Toronto Shareholder Claims Lawyers
Shareholders Agreement Claims
Family Shareholder Disputes | Closely Held Shareholder Disputes
Company Disputes | Corporate Litigation | Share Investment Claims
Minority Shareholder Oppression Action | Investment or Loan Dispute
Start-Up Company Disputes | Shareholder Dilution Claim
Financial Disclosure | Appointment of Auditor | Derivative Action
Serving All of Ontario & Elsewhere in Canada From Our Toronto Offices
Gilbertson Davis LLP has lawyers who have acted in Ontario and other jurisdictions in litigation and arbitration for small and mid-sized Ontario corporations, shareholders, directors, officers, and executives. We also can act for US-based clients and with their US Attorneys in Ontario litigation and in international arbitration.
Shareholders Claims | Shareholders Disputes
Disputes within a corporation disrupt the business and, if not dealt with quickly and discreetly, may have a long term effect on their reputation in the business community, on the confidence of their trading partners and perhaps even the viability of the business itself.
Shareholders Litigation – Examples
Business disputes can arise in a wide variety of circumstances, including:
- Abuse of Trust
- Asset Sale Disputes
- Breach of Fiduciary Duties
- Breach of Shareholders’ Agreement
- Breach of Director’s Duties
- Breach of Share Subscription Agreement
- Business Asset Sale Dispute
- Business Disputes
- Business Litigation
- Business Sale Disputes
- Buy-Sell Agreements
- Buy-Out Rights and Obligations
- Civil Fraud, Deceit, Fraudulent Misrepresentation
- Claims by Shareholders
- Closely Held Company Disputes
- Corporate Disputes
- Corporate Mismanagement
- Corporate Governance Issues
- Disputes Arising from Shareholders’ Agreement
- Disputes about Share Valuation
- Disputes Arising from Share Subscription Agreement
- Disputes on Dissolution of Company
- Director’s Liability and Officer’s Liability
- Enforcement of Shareholders’ Agreement
- Enforcement of Share Subscription Agreement
- Expulsion of Director or Officer
- Family Business Disputes
- Fiduciary Duties
- Fraud on Company
- Fraud on Investors
- Financial Statement Irregularities and Disputes
- Investor Claims
- Investment Fraud
- Minority Shareholder Oppression
- Misappropriation of Funds, Opportunities or Trade Secrets
- Non-Competition Agreement
- Non-Solicitation Agreement
- Oppression Remedy
- Owners Disputes
- Personal Liability of Directors and Officers
- Preservation of Shareholder’s Rights
- Sale of Business Disputes
- Shareholders Agreement Disputes
- Share Subscription Agreement Disputes
- Shareholders Claims Against Directors
- Share Dilution Claims
- Shareholder Claims
- Shareholder Disputes
- Share Subscription Agreement
- Shotgun Clause (of a Shareholders Agreement)
- Start-up Company Disputes
- Tech Company Disputes
- Unfair Treatment of Partners and Shareholders
- Winding-Up Company
Shareholders in a corporation have a variety of remedies available under the Ontario Business Corporations Act and the Canada Business Corporations Act. Whether the Ontario or Canada Act will apply depends on the jurisdiction in which the corporation was incorporated.
Application for a Compliance Order
Section 253 of the Ontario BCA and Section 247 of the CBCA provide that a complainant may apply to the court for an order that the corporation comply with the Act (Ontario CBA or CBCA, depending on where the corporation was incorporated), the regulations, articles, by-laws or a unanimous shareholder agreement. On an application for a compliance order, the court may so order and make any further order it thinks fit. This remedy is available in addition to any other rights held by the shareholder.
Inspectors and Investigators
Section 161 of the Ontario BCAand Section 229 of the CBCAprovide that a shareholder can apply to the court to order an investigation “to bring to light facts which otherwise might be inaccessible to shareholders and other security holders.” The court may make any order it sees fit, including:
- An order to investigate
- An order appointing or replacing an inspector
- An order authorizing an inspector to enter any premises in which the court is satisfied there might be relevant information, and to examine anything and make copies of any document or record found on the premises
- An order requiring any person to produce documents or records to the inspector
- An order authorizing an inspector to conduct a hearing, administer oaths and examine any person under oath, and prescribing rules for the conduct of the hearing
- An order requiring any person to attend a hearing conducted by an inspector and to give evidence under oath
- An order requiring the corporation to pay costs of the investigation
Both the Ontario BCA and the CBCA provide that shareholders are entitled to at least an annual accounting of the business and affairs of the corporation. The financial statements provided to the shareholder must be properly audited. If a corporation does not have an auditor, the Act provides that the court, upon the application of a shareholder or director, may appoint an auditor for the corporation. Further, the Act disqualifies an auditor if he or she is not independent of the corporation, its affiliates and the directors or officers of the corporation. A shareholder may apply to the court to disqualify an auditor that does not meet the requirements of the Act.
Appointment of Auditor
Section 149(8) of the Ontario Business Corporates Actprovides that if a corporation does not have an auditor,a shareholder or Director may apply to the court to appoint and fix the remuneration of an auditor to hold office until an auditor is appointed by the corporation’s shareholders. Section 167(2) of the Canada Business Corporations Actprovides the same right for federally incorporatedcorporations.
These sections can be effective solutions for a shareholder that suspects that the operation and finances of the corporation differ from the information provided to the shareholder. As auditor of a corporation, the auditor is entitled to receive notice of every meeting of shareholders and, at the expense of the corporation, to attend and be heard thereat on matters relating to the auditor’s duties. Further, upon demand of the auditor of a corporation, the directors of the corporation are required to provide to the auditor all information and explanations, reasonably obtainable, that the auditor deems necessary to make an examination and report.
Section 246 of the Ontario BCA and Section 239 of the CBCA allow a shareholder, with leave of the court, to bring a derivative action. Unlike the oppression remedy, which is a personal action of the shareholder, a derivative action is brought on behalf of the corporation. Accordingly, a remedy awarded for a derivative action typically belongs to the corporation and not individual shareholders. The relationship the shareholders have to the action and remedy is only derivative through the corporation.
Examples of Derivative Action
Leave to the court to commence a derivative action might be appropriate where all shareholders are harmed through injury to the corporation. Instances where a derivative action may be appropriate include:
- Loss of share value as a result of a wrong to the corporation
- Directors or officers misappropriating corporate assets
- Breach of fiduciary duty owed to the corporation
- Breach of a contractual obligation owed to the corporation
- Misconduct of directors of officer causing harm to the corporation
- Fraud or theft committed against the corporation
- A departing officer, director or employee takes corporate date or clients
If a court grants leave for a shareholder to bring a derivative action, the court may at any time make any order it sees fit.
We can provide sound advice and results-oriented representation in time sensitive matters. When there is need for immediate assistance from the courts, clients turn to lawyers who have acted in such proceedings before. Gilbertson Davis LLP has lawyers who are experienced in matters requiring immediate litigation response, for both local and international clients.
Choose Gilbertson Davis LLP
Gilbertson Davis LLP has lawyers with experience in a wide variety of businesses and industries which allows us to have a quick understanding of your business and the dispute at hand.
We can provide early and results-oriented strategic advice and representation.
Gilbertson Davis LLP has lawyers who have knowledge and experience in the management of business disputes including the urgent equitable remedies available through the courts. Some of our lawyers have considerable experience in the court procedures and process, including that of the Commercial List, a part of the Ontario Superior Court of Justice which is dedicated to the resolution of eligible Toronto-based business litigation.