Oppression Remedies In Ontario Law

Oppression remedies are focused on ensuring fairness to shareholders affected by oppressive acts of a corporation or its directors. The remedies for oppression, unfair prejudice, or unfair disregard of relevant interests, are governed in Ontario by the Business Corporations Act, RSO 1990, c B.16.

When claiming oppression, unfair prejudice, or unfair disregard of relevant interests, the facts are vital in determining if you are entitled to any relief.  The Court will consider the shareholder’s reasonable expectations based on the specific context and relationships. A Court determining potential oppression must answer two questions:

1. Has there been a violation of your reasonable expectation about how the company conducts its business?
2. Was your expectation violated by conduct that was oppressive, unfairly prejudicial, or because the conduct unfairly disregarded your interests as a shareholder?

Determining your reasonable expectation includes:

• consideration of general commercial practice;
• the nature of the company;
• the relationship between the parties;
• past practice;
• steps the shareholder could have taken to protect himself or herself;
• representations and agreements; and
• the fair resolution of conflicts between corporate stakeholders.

Once you establish a violation of reasonable expectations in the circumstances, you still must satisfy the second question, namely, that your expectation was violated by oppressive conduct, unfair prejudice, or unfair disregard of relevant interests.

Oppressive or Unfair Conduct

Oppressive conduct is sufficiently serious if it is burdensome, harsh or wrongful; it may not necessarily be illegal or an invasion of legal rights but must be reprehensible. There must be some aspect of the conduct against you that is injurious and wrong.

Unfair prejudice may be less deserving of blame but still has unfair consequences. Unfair disregard of interests can happen where a shareholder’s interests are ignored contrary to their reasonable expectations. There also needs to be a causal connection between the impugned conduct and the outcome on which the complaint is based. To be considered oppressive, unfair and injurious, the conduct must directly cause the claimed injury.

Examples of oppression include:

• squeezing out minority shareholders for personal reasons;
• failing to disclose related party transactions;
• paying management fees or dividends unequally;
• misappropriating funds;
• lack of adequate disclosure of material information to minority shareholders; and
• majority shareholders managing the corporation for personal gain.

If oppression, unfair prejudice, or unfair disregard of interests is established, then the Court may make any interim or final order it deems appropriate. Section 248 of the Business Corporations Act provides a long list of possible oppression remedy orders, including:

• restraining the oppressive or unfair conduct;
• directing the company, or another shareholder, to purchase some or all of the shares of the oppressed shareholder;
• varying or setting aside a transaction or contract involving the corporation;
• directing the company to compensate the aggrieved person, and
• winding up the company.

Oppression Claim

In Ontario, an oppression claim may be eligible to be heard by the Commercial List in Ontario if it involves a complex commercial issue. If so, the oppression claim will likely proceed more quickly compared to a typical lawsuit.

Learn more about shareholders on our website by visiting our page on Minority Shareholders.