A corporation or company is a legal entity. That means it
has the same rights and abilities as person. Problems arise in that
corporations involve the interests of many individuals, whether
they be its shareholders, directors, officers or creditors.
Decisions made through a Board of Directors may result in actions
being determined by the majority to the harm and detriment of one
or more of the other stakeholders.
The normal consequence of majority rule is that the minority may
be left without a remedy. It is for that reason that both the
Federal and Provincial legislatures created the "oppression
remedy". This is a statutory tool which is both powerful
and comprehensive and does provide a means for the righting of
corporate wrongs despite the lack of majority. The remedies
available are very flexible and far more dynamic and varied than
the usual legal remedies.
The relief is not, however, limitless. There are important
limits imposed by the courts. The aggrieved party must have
had a "reasonable expectation" that was ignored.
Further, it is not all prejudicial or disregarding conduct that
invites sanction. It is only that which is objectively
unexpected and unduly fair. The aggrieved stakeholder must
first establish that they have standing as a proper complainant
within the legislation. Secondly, the conduct complained of
must be oppressive, unfairly prejudicial, or unfairly disregard the
interest of the stakeholder. The proof requires evidence, for
the detailed the evidence, the more likely the case will be
established. Once that is done, the court may make any
interim and final order it thinks fit. The legislation
provides a lengthy and non-exhaustive list of possible
Normally all three heads of conduct are alleged. Any are
sufficient to establish the remedy. There is, however, no
definition of the nature of the conduct that will give rise to the
remedy. That is left to the facts and the court's
decision. The courts do that by looking for badges of
oppressive conduct which can include a lack of a valid corporate
purpose for the transaction, a failure on the part of the
corporation and its controlling shareholders to take reasonable
steps to stimulate an arm's length transaction, the lack of
good faith on the part of the directors of the corporation, a
discrimination between shareholders with the effect of benefiting
the majority shareholder to the exclusion or detriment of the
minority shareholder, a lack of adequate and appropriate disclosure
of material information to the minority shareholder and finally, a
plan or design to eliminate the minority shareholder.
An important consideration is the reasonable expectations of the
complainant. It is those expectations that are protected by
the legislation. They must be objectively reasonable in the
circumstances. They must be expectations which could be said
to have been (or ought to have been considered as) part of the
compact (their agreement) of the shareholders. These
determinations are highly fact specific.
The Oppression Remedy provisions are a necessary safeguard of
the rights of the minority stakeholders in a company. The remedies
are powerful and capable of rectifying almost all such wrongs. The
approach though is evidence based and the complaining stakeholder
must establish a solid prima facie case. Once done, there are
interim (pre-decision) remedies available for funding and direction
to ensure a quick and efficient process to the final
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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