Shareholder oppression occurs when majority shareholders or those in control of a corporation engage in conduct that unfairly prejudices, disregards, or harms the interests of minority shareholders. This goes beyond routine business disagreements—it involves a misuse of corporate power that disproportionately impacts minority stakeholders. The issue is particularly common in closely held private corporations, where shares are not publicly traded, and minority shareholders typically have little ability to sell their interests or exit the business. As a result, they may find themselves trapped in a situation where their rights and investments are vulnerable. Recognizing and addressing shareholder oppression is essential for protecting minority rights and maintaining fairness in corporate governance. One-way shareholders may seek compensation for wrongdoings is through an “oppression” action. Ontario’s oppression remedy is set out in section 241 of the Ontario Business Corporations Act (“OBCA”). In addition to the OBCA, federally incorporated companies are governed by the … Read More
Ontario Court of Appeal Comments on the Oppression Remedy – Oppression is Focused on Fairness and Equity, not on Legal Rights
In the recent decision of the Ontario Court of Appeal (“ONCA”), Pereira v. TYLT Technologies Inc. (TYLTGO), 2023 ONCA 682, the appellant successfully appealed a judgment dismissing his application for an oppression remedy under the Canada Business Corporations Act, RSC 1985, c C-44 (the “CBCA”). The appellant argued that the application judge erred in only considering the appellant’s expectations as an employee and failing to consider his expectations as a shareholder. The ONCA opined that the application judge took an “overly narrow” approach by placing focus mostly on the documents signed by the parties and not considering all of the circumstances. The ONCA considered some of the major principles related to the oppression remedy, including the following: Oppression is an equitable remedy which seeks to ensure fairness. Thus, conduct found to be oppressive does not need to be “unlawful” per se, because oppression is focused on “fairness and equity”, rather … Read More