Although it is too early to determine all of the implications of
the new Business Corporations Act1 (hereinafter
the "BCA"), the courts have, on several occasions,
already analyzed the application of this statute, particularly in
the area of recourses for rectification. New sections 450 and
following strongly resemble the sections of the federal statute
concerning this subject.
Henceforth, sections 450 and following clearly give judges the
opportunity to rectify the situation in cases of abuse of power or
iniquity, with respect to both existing situations and situations
that may arise in the future2. This recourse is made
available to shareholders and directors, whether former or current,
and to any other persons who may have an interest, as determined by
the court (such as the creditors for example).
Sections 450 and following give the courts wide discretion with
respect to the orders they can make. Thus, under the provisions of
section 451, judges may order the appointment of a receiver, the
revision of the functioning of a corporation by amending its
articles or a unanimous shareholder agreement, the purchase or
redemption of securities, etc. The list set out in that section is
For example, in the context of dispute heard in July 2011, three
plaintiffs (two shareholders of a Quebec corporation incorporated
under the BCA and the corporation itself) instituted an action for
rectification against the third shareholder of the corporation, who
was also the duly authorized representative of a Chinese subsidiary
of the corporation. The plaintiffs alleged certain oppressive acts
by the third shareholder who had, in particular, refused access to
the Chinese subsidiary by the other two shareholders and made
certain false statements to some of its customers concerning its
problems in delivering products. Apparently, the subsidiary had
even ceased its activities due to the delivery problems. The
plaintiffs, having been refused access to the plant and to the
subsidiary's documents, could not assess the situation or
Taking into account the affidavits describing the third
shareholder's oppressive actions, and in view of the
contradictory version of the facts furnished by that shareholder,
the Court, basing itself on section 451 of the BCA, ordered the
communication to the plaintiffs of not only the annual financial
statements of the corporation (access to which is mandatory under
section 228 of the BCA), but also a whole series of documents
relating to the financial statements, such as the order forms,
invoices, bank statements and all communications relating in
particular to the products sold.3
This decision shows to what extent the courts can use their
discretionary powers to make any order that should enable the
persons concerned to rectify a problematic situation.
1 R.S.Q. c. S-31.1.
2 Section 450 BCA.
3 9229-5518 Québec inc. v.
Desautels, 2011, QCCS 4606 (CanLII).
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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