The powerful but infrequently-used remedy known as the
"derivative action" permits a shareholder or other
complainant to advance an action on behalf of the corporation when
the corporation refuses to bring the action itself.
oppression proceedings, a complainant brings a derivative
action in the name of or on behalf of the company to enforce a
right, duty or obligation enforceable by the company.
The derivative action is often used to enable a shareholder or
other complainant to circumvent corporate management that will not
take action to rectify a wrong where it may have been involved in
or responsible for the wrong suffered by the corporation. However,
the remedy is not limited to claims against other shareholders or
Standing to begin a derivative action is given to a
"complainant", defined in the Ontario Business
Corporations Act as a current or former shareholder, director
or officer of a corporation, or any other person who, at the
court's discretion, is a proper person to bring an
In order to bring a derivative action, the claimant must satisfy
the court that the following four statutory pre-conditions are
The directors of the corporation will not bring, diligently
prosecute or defend or discontinue the action.
The complainant has given reasonable notice to the directors of
the corporation of his intention to seek leave to commence a
The complainant is acting in good faith.
It appears to be in the interests of the corporation that the
action be brought, prosecuted, defended or discontinued.
Where a complainant is successful in persuading the court that
leave to commence a derivative action should be given, the court
may make "any order it thinks fit," including, but not
limited to an order directing the conduct of the action or
authorizing the complainant or any other person to control the
conduct of the action.
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.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
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