1. In the absence of specific provisions in the
shareholders' agreement or bye-laws of a company, what
protections are automatically given to a minority shareholder under
The Canada Business Corporations Act, the federal legislation
that governs business corporations, provides several protections
for minority shareholders, many of which are also available under
provincial business corporations statutes, including:
Oppression. Where a shareholder believes that
the affairs of a company have been conducted in an oppressive or
unfairly prejudicial manner, it can apply to the court for a
remedy. The court has broad discretion to make any order it
considers appropriate, including:
restraining the conduct complained of;
appointing directors in place of any of the directors then in
appointing a receiver or receiver-manager;
compensating the aggrieved person; and
liquidating and dissolving the company.
Derivative action. A shareholder can apply to
the court for leave to bring an action on behalf of a company to
remedy a wrong to the company. The court must be satisfied
the directors of the company do not plan to initiate an action
the shareholder is acting in good faith; and
it appears to be in the best interests of the company that the
action be brought.
Dissent and appraisal rights. A shareholder
has the right to require a company to buy its shares for fair value
where that shareholder dissents from a shareholder vote approving
certain fundamental corporate changes.
Shareholder proposals. A shareholder who is
entitled to vote at an annual meeting and owns more than 1% of the
company's voting shares or voting shares with a fair market
value of at least C$2,000 (as at 31 August 2010, C$1 was EUR0.75)
can submit a proposal to the company to be discussed and voted on
at the next annual meeting.
2. Are specific voting majorities required by law for
any corporate actions (for example, increasing share capital,
changing the company's constitution, appointing and removing
directors and so on)?
The Canada Business Corporations Act requires that certain
corporate actions be approved by special resolution (at least 66
2/3% of the votes cast by the shareholders entitled to vote on the
Changing the company's name or its registered office.
Adding, changing or removing any restriction on the business or
businesses that the company can carry on.
Amending the company's constating documents (articles and
Approving an amalgamation (merger) of the company with another
Approving the sale or lease of all or substantially all of the
company's assets. .
Approving the liquidation and dissolution of the company.
3. Are there any statutory restrictions on quorum or
voting requirements at director and shareholder meetings? Do they
need to be proportionate to shareholdings?
A company's quorum and voting requirements at director and
shareholder meetings is usually contained in the company's
byelaws. If no quorum has been set, the quorum is established by
the federal and provincial business corporations statutes. The
Canada Business Corporations Act provides that the quorum for a
directors' meeting is a majority of the number of directors or
the minimum number of directors required by the articles. The
quorum for a shareholders' meeting is the holders of a majority
of the shares entitled to vote at the meeting, present in person or
Quorum and voting requirements do not need to be proportionate
4. Can voting majorities required by law be disapplied
to protect a minority shareholder (for example, through class
rights or weighted voting)?
Under corporate law, the statutory voting requirements cannot be
varied to protect minority shareholders. However, in the case of
certain corporate actions that affect the shareholders of a
particular class or series differently than other shareholders, the
shareholders of the class or series so affected may be entitled to
vote separately in respect of that corporate action. These types of
protections would normally be found in the terms of the shares
themselves or in a shareholders' agreement.
Under provincial securities law, majority approval by
independent shareholders is required for certain transactions,
including some transactions involving a related party
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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