Commercial Litigation > Shareholder Disputes
As a shareholder in a company, you expect to benefit from its success, but when there is a shareholder dispute, it is usually tied to a disagreement among shareholders regarding the direction and management of a company. Disputes can arise for several reasons, including disagreements about the company’s strategy, mismanagement by the board of directors, or conflicts between shareholders.
Other reasons for dispute can include the allocation of profits or the appointment of directors. As well, conflicts of interest may arise when one shareholder has personal or business interests that conflict with the company’s interests. Other breaches of shareholder agreements may include a failure to follow voting procedures, unauthorized share issuances, or mismanagement of funds.
Legal Remedies for Shareholder Disputes
In Canada, shareholders have various legal options available to them when disputes arise. These remedies aim to resolve disputes efficiently and effectively while minimizing the costs to the company and its shareholders. Negotiation, mediation, and shareholder agreements can all help, but when those fail, we can help you explore your legal options, which include:
Oppression Remedy
Oppression Remedy allows shareholders to bring a claim against the company or its directors for oppressive or unfairly prejudicial conduct. The court may make various orders, including the cancellation of transactions, the appointment of a receiver, or the award of damages.
Derivative Action
A derivative action is a legal action brought by a shareholder on behalf of the company against a director or officer for a breach of duty. The action seeks to recover damages for the harm caused to the company by the breach of duty. A derivative action is often used when the company’s directors or officers have breached their duties, and the company is unable or unwilling to bring a legal action.
Liquidation or Dissolution
In some cases, the only solution to a shareholder dispute is the liquidation or dissolution of the company. Liquidation involves the sale of the company’s assets to pay off its debts and distribute any remaining funds to shareholders. Dissolution involves the termination of the company’s existence. Both options are extreme, and the court will only order them as a last resort.
Find out how we can assist you
Shareholder disputes are common in Canada and can have significant implications for the company and its shareholders. We use our 40+ years of litigation experience to offer you a frank assessment of your case, and how we can help you resolve it. Litigation doesn’t have to be expensive.
If you are a shareholder in dispute with other shareholders or the company you hold shares in and want to discuss whether your situation qualifies for injunctive relief and/or damages (general, special or out of pocket costs), contact J.F. Lalonde or Andrew Donaldson at (613) 232-5773. Or you can arrange a consultation using our online form below.