Oppression Remedies
What is an oppression remedy?
An oppression remedy typically refers to a legal action that a shareholder/family member can act on if they believe their rights have been unfairly prejudiced or disregarded within a family-owned business or other shared assets between parties.
How does this arise in family court?
An oppression remedy in family court may arise when there are disputes or unfair treatment among family members in the context of shared businesses, assets, or financial matters. It provides a legal avenue for addressing issues of unfair prejudice or disregard of a family member’s interests. In other words, “equitable considerations” are taken into account. If a minority shareholder has reasonable expectations (decided by the court) regarding an organization being run in a certain way, then it is unfair for a corporation to be operated in a manner that opposes those expectations.
What requirements must a complainant meet?
To apply for a remedy, one must first meet the requirements of a “complainant” defined under section 245 as:
- A registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates
- A director or an officer or a former director or officer of a corporation or of any of its affiliates
- Any other person who, in the discretion of the court, is a proper person to make an application under this part
- any act or omission of the corporation or any of its affiliates effects or threatens to effect a result
- the business or affairs of the corporation or any of its affiliates are have been or are threatened to be carried on or conducted in a manner, or
- the powers of the directors of the corporation or any of its affiliates are, have been, or are threatend to be exercised in a manner
What act has the most effective remedies?
a. Buy the opposing applicants shares at fair market value
Or
b. To sell his/her shares to the applicant at fair market value
Can a court order a buy-out? And under what act? Explain how family law does not have the authority to change ownership, only equalization.
Yes, as stated above in the previous question, the court can order a buy-out under the Business Corporations Act (OBCA) in cases of oppression. However, family law, which primarily deals with equalization of assets and spousal support, may not have the authority to change ownership directly but can influence the distribution of family assets during divorce or separation (as stated above in question 3).
What does Section 207 do?
Section 207 of the Ontario Business Corporations Act (OBCA) provides the authority for the court to order the “winding up” of a corporation in cases of oppression or unfair treatment. “Winding up” may be ordered if family law remedies are not enough. The process of a “wind up” forces the dissolution of the company. This can include termination of the corporation’s operations and the distribution of its assets. Its primary purpose is to sell off stock, pay off creditors, and distribute any remaining assets to partners and shareholders. Courts are typically reluctant to order a wind up until other remedies have been pursued.
Can section 207 be used in case of bankruptcy?
Bankruptcy proceedings are typically governed by federal laws, such as the bankruptcy and insolvency act (BIA). Although section 207 of the Business Corporations Act (OBCA) in Ontario can be used in cases where a corporation is facing financial difficulties, it likely cannot directly address bankruptcy issues.