We have experience acting for, advising and representing those in closely-held company litigation, both arising from family business disputes and start-up company disputes. Family Business Disputes Many businesses in Canada are family businesses or have evolved from family businesses. Family businesses present many unique challenges as they grow, as key members of the company or partnership leave the family business, or when personal relationships of the key members of the family business thereby change or deteriorate. One of the most common differences between a family business and other established businesses, whether or not a shareholders’ agreement, partnership agreement and other legal documentation was used in the formation of the family business, is the informality in operation of the family business, including the often ignored distinction in fact between employees, shareholders, or partners – since family members often take on multiple roles. Please see our webpage on Family and Closely Held … Read More
Internal Business Disputes in Trades, Subtrades, Contractors and Subcontractors
Internal Business Disputes in Trades, Subtrades, Contractors and Subcontractors Our Business Dispute Practice Group can represent shareholders in dispute with other shareholders and/or directors in Closely Held Businesses, Family Businesses, and Startup Businesses. Often a dispute arises because a shareholder cannot obtain access to financial information, financial statements, financial documents and records of the corporation, voting rights, rights with respect to meetings or fraud. In some circumstances, an application can be made by a shareholder for access to financial information, financial statements and records of the corporation. Shareholders remedies include oppression remedy actions and derivative actions, and the appointment of an auditor or an an inspector. One of our senior business litigation lawyers was a faculty member of the Osgoode PD professional development program concerning Shareholder Litigation and the Closely-Held Company. Oppression Remedy The oppression remedy is a mechanism in the Ontario Business Corporations Act and the Canada Business Corporations Act to protect the interests … Read More
Ontario Court of Appeal Comments on the Oppression Remedy – Oppression is Focused on Fairness and Equity, not on Legal Rights
In the recent decision of the Ontario Court of Appeal (“ONCA”), Pereira v. TYLT Technologies Inc. (TYLTGO), 2023 ONCA 682, the appellant successfully appealed a judgment dismissing his application for an oppression remedy under the Canada Business Corporations Act, RSC 1985, c C-44 (the “CBCA”). The appellant argued that the application judge erred in only considering the appellant’s expectations as an employee and failing to consider his expectations as a shareholder. The ONCA opined that the application judge took an “overly narrow” approach by placing focus mostly on the documents signed by the parties and not considering all of the circumstances. The ONCA considered some of the major principles related to the oppression remedy, including the following: Oppression is an equitable remedy which seeks to ensure fairness. Thus, conduct found to be oppressive does not need to be “unlawful” per se, because oppression is focused on “fairness and equity”, rather … Read More
Professional Liability Claims Arbitrator – Experienced and Qualified Arbitrator with Reasonable Fee Rates
Professional Liability Claims Arbitrator David Alderson is an independent, experienced and qualified Arbitrator. Practice in professional liability, professional indemnity and professional negligence cases make him a good choice as sole or panel arbitrator in professional liability claims arbitrations. He has been appointed by the courts in commercial arbitration disputes. Business & Financial Professionals Property and Real Estate Professionals David can be appointed as sole arbitrator concerning claims and disputes involving these professionals: Business & Financial Professionals Directors Officers Accountants Actuaries Auditors Investment Advisors Financial Advisors Financial Planners Financial Analyst Investigators Consultants Trustees Securities Brokers Valuators Lawyers Partners Joint Venture Parties Retirement Plan Administrators Property and Real Estate Real Estate Brokers Real Estate Agents Stakeholders Fiduciaries Architects Engineers Auctioneers Lawyers Fiduciaries Trustees Estate Trustees Administrators Executors Receivers Trustees in Bankruptcy Lawyers Arbitration Expertise David has arbitrated disputes on a wide variety of matters, and has been appointed by the Ontario Superior … Read More
Shareholder’s Remedies
Shareholder Remedies Under the Ontario Business Corporations Act (“OBCA”), shareholders of a corporation have a variety of rights. Outlined below are a few rights that all shareholders should be aware they possess. Voting Rights The board of directors, under s. 115 are ultimately responsible for managing or supervising the management of the business and affairs of a corporation. Major business decisions also involve the participation of the board of directors, though sales, leases, or exchanges of all or substantially all the property of the corporation that is not in the ordinary course of business requires the approval of shareholders (s. 184(3)). Shareholders also have voting rights that allow them to control the makeup of the board of directors (s. 119(4)), and also the ability to remove directors under s. 122(1) (though this is subject to exceptions under s. 120(f)). Shareholders have additional voting rights under s. 100(2). Access to Information Rights Under s. 140(1) corporations … Read More
Confidentiality, Non-Competition and Non-Solicitation Clauses In Contracts
Confidentiality, non-competition, and non-solicitation clauses often show up in a variety of business contracts including employment and executive contracts, shareholder, and director agreements, as well as, independent contractor agreements, joint venture agreements and mergers, to name a few. A question that must be considered by contracting parties to such agreements is: What is the enforceability of these types of restrictive covenants? This question particularly becomes important when parties may part ways and a breach of the clauses is suspected or confirmed. These clauses are premised on the assumption that the relationship between the parties will result in the sharing of proprietary and sensitive business knowledge, contacts and relationships related to the operations of a business, which the company seeks to protect, particularly once the relationship between the parties ends. Non-competition clauses usually restrict one’s ability to engage in a competing business. Non-solicitation clauses prohibit one from soliciting stakeholders and contacts … Read More
Corporate Governance Considerations During the Covid-19 Pandemic
Corporate governance issues are top of mind for directors and businesses who are attempting to navigate through the Covid-19 Pandemic related closures and emergency measures. Boards of Directors still need to operate and make decisions in the best interests of the corporation, and this can involve tough decisions, particularly where there is little guidance as to how measures to lift Covid-19 related restrictions will play out. By example, while it may be in the best interest of investors and shareholders that the Board act to lay off employees in the short term, the impact of staff shortages when Covid-19 restrictions are lifted may pose it’s own challenges. Many businesses must consider how to hold governance meetings during Covid-19 times. On March 30, 2020, Ontario passed an Order under the Emergency Management and Civil Protection Act (EMCPA), (Ontario Regulation 107/20) entitled “Meetings for Corporations” making temporary changes to the Business Corporations … Read More
When Shareholders Need an Auditor or Inspector
I address here in a general way the procedures available for a shareholder or group of shareholders seeking the assistance of the court to have an auditor or inspector appointed. Financial Statements – None or Inaccurate Shareholders in closely-held Ontario corporations sometimes have concerns about the accuracy of the financial statements when the company does not have an auditor. Oppressive or Unfairly Prejudicial Conduct In other cases, a shareholder in an Ontario corporation may consider that the corporation has been carried on, or the powers of the directors are, or have been, exercised, in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards, the interests of the shareholder. Corporation and Fraud One or more shareholders may have concerns that the corporation’s business is, or has been, carried on with the intent to defraud, that the corporation was formed or dissolved for a fraudulent or unlawful purpose, … Read More
Liability of Directors and Officers | Oppression Remedy | Shareholders Claims
The lawyers in our Business Dispute Practice Group have acted in Ontario and other jurisdictions for small, mid-sized and large corporations (incorporated in Ontario and in Canada), shareholders, directors, officers, and executives in corporate disputes and shareholder disputes. We have acted for clients in both oppression remedy action and derivative actions. Oppression Remedy The oppression remedy is a mechanism in the Ontario Business Corporations Act and the Canada Business Corporations Act to protect the interests of shareholders and stakeholders in a corporation against wrongful conduct. Whether the Ontario or Canada Act will apply depends on the jurisdiction in which the corporation was incorporated. The oppression remedy can be used to protect the interests of shareholders, directors, officers or creditors against the acts of other shareholders, the board of directors or other affiliates of the corporation. The oppression remedy can be used to protect the interests of shareholders, directors, officers or creditors against the … Read More
Limitation Period Considerations in Derivative Proceedings
Under modern business corporation legislation, a claim for wrongdoing against a corporation can only be brought by the corporation itself, or by way of a derivative action for which leave from the court is required. In Ontario, there is a standard two-year limitation period that applies to the commencement of most lawsuits, including derivative claims on behalf of a corporation. When wrongs done to a corporation are alleged to have been done by a director or directors who exercise control and decision-making on behalf of the corporation, it is unlikely that those same directors will agree to commence a claim on behalf of the corporation for those wrongs. It is then up to other interested stakeholders, such as shareholders, to seek leave to commence a derivative claim on behalf of the corporation for the wrongs done to the corporation. Until the release of a 2015 Supreme Court of Canada ruling … Read More
Shareholder Disputes, Oppression Remedy, and Liability of Directors and Officers
Our lawyers have acted in Ontario and other jurisdictions for small, mid-sized and large Ontario and Canadian corporations, shareholders, directors, officers, executives and creditors in corporate disputes and shareholder disputes. We have acted in both oppression remedy action and derivative actions. Oppression Remedy The oppression remedy is a mechanism in the Ontario Business Corporations Act and the Canada Business Corporations Act to protect the interests of shareholders and stakeholders in a corporation against wrongful conduct. Whether the Ontario or Canada Act will apply depends on the jurisdiction in which the corporation was incorporated. The oppression remedy can be used to protect the interests of shareholders, directors, officers or creditors against the acts of other shareholders, the board of directors or other affiliates of the corporation. The oppression remedy can be used to protect the interests of shareholders, directors, officers or creditors against the acts of other shareholders, the board of directors or other affiliates … Read More
The Ontario Securities Commission and the “Active Market”
Determining what constitutes an “active market” for securities can have significant implications for Investment Dealers, Approved Persons, and other market participants facing civil lawsuits and regulatory scrutiny. Such a determination provides ample assistance to investors seeking to quantify damages allegedly sustained through (1) misrepresentations in a company’s financial documents or (2) the negligence of their financial advisors. In Sutton (re), 2018 ONSEC 42, however, the failure to show an active market for securities proved devastating to the defence of a Chief Financial Officer (“CFO”) in charge of pricing those securities. Background As CFO of First Leaside Securities Inc. (“FLSI”), Brian Sutton’s (“Mr. Sutton”) position required him to assess the price of certain unlisted securities (“Fund Units”) issued by three limited partnerships (“Funds”). In pursuit of meeting these obligations, Mr. Sutton relied on the Fund Units’ allegedly active market to ascribe an appropriate price. The Industry Investment Regulatory Organization of Canada (“IIROC”) … Read More
Shareholders’ Remedies under the OBCA: An Overview (Part 2/2)
When a shareholder’s rights are breached, there are a variety of legal remedies available under the Ontario Business Corporations Act (“OBCA”). For more information on shareholders’ rights, please click here to see part 1 of this post. Oppression Remedy It is first important to note that as per the Ontario Court of Appeal decision Maurice v. Alles, the standard two-year limitation period set out in the Limitations Act applies to oppression remedy claims. The “clock starts to run” when the oppressive conduct first began, meaning that individuals must not delay if they wish to pursue an oppression remedy. The oppression remedy under s. 248 of the OBCA is broad in nature, and there is a large amount of judicial discretion afforded in its application. The oppression remedy can be an especially strong tool in protecting minority shareholders. When the Court determines that there has been oppressive conduct, unfairly prejudicial conduct, or conduct that disregards the interests of any shareholder it may make an order to resolve the matter in a variety of ways. … Read More
Shareholders’ Rights under the OBCA: An Overview (Part 1/2)
Under the Ontario Business Corporations Act (“OBCA”), shareholders of a corporation have a variety of rights. Outlined below are a few rights that all shareholders should be aware they possess. Please click here to see part 2 of this post on shareholders’ remedies. Voting Rights The board of directors, under s. 115 are ultimately responsible for managing or supervising the management of the business and affairs of a corporation. Major business decisions also involve the participation of the board of directors, though sales, leases, or exchanges of all or substantially all the property of the corporation that is not in the ordinary course of business requires the approval of shareholders (s. 184(3)). Shareholders also have voting rights that allow them to control the makeup of the board of directors (s. 119(4)), and also the ability to remove directors under s. 122(1) (though this is subject to exceptions under s. 120(f)). Shareholders have additional voting rights under … Read More
Court Considers Oppression Claim by Creditors against Directors
In The Investment Administration Solutions Inc. v. Pro-Financial Asset Management Inc., 2018 ONSC 1220 (CanLII), the Ontario Superior Court considered an oppression claim under section 248 of the Ontario Business Corporations Act by a creditor against the directors of a debtor company. The Plaintiff company provided back office services to the Defendant Pro-Financial. Pro-Financial was an Ontario Corporation which carried on business as an investment dealer. Pro-Financial was poorly managed and did not comply with the applicable regulatory requirements. Pro-Financial’s assets were eventually sold to another dealer at the insistence of the Ontario Securities Commission (“OSC”). As a result of the sale, there was no money left to pay the Plaintiff’s significant outstanding accounts. The Plaintiff brought an action against, among others, directors of Pro-Financial. The Plaintiff’s claim included a claim for an oppression remedy. The Plaintiff argued that the directors of Pro-Financial had violated Pro-Financial’s reasonable expectation that the … Read More
Court of Appeal Allows Negligence Claim Against Individual Starbucks Employees to Proceed
In Sataur v. Starbucks Coffee Canada Inc., 2017 ONCA 1017, the plaintiff alleged that a Starbucks barista poured scalding water on the plaintiff’s hands. The plaintiff sued Starbucks, and also brought claims against the barista and the Starbucks store manager personally. The plaintiff alleged that the barista and the store manager owed the plaintiff a duty of care and that each was personally liable to the plaintiff for breaching those duties. Starbucks brought a motion to strike the plaintiff’s claims against the barista and store manager on the basis that, among others, the plaintiff could not claim against them personally. The motion judge agreed, stating that employees are not liable for acts within the scope of their authority and done on behalf of their corporation. The motion judge struck the plaintiff’s claims against the barista and store manager. The plaintiff appealed. The Court of Appeal, citing the Supreme Court of Canada’s … Read More
Nick Poon Comments on Condominium Liability Issues for the Toronto Sun
Nick Poon was recently asked to comment on the duty and standard of care of condominium corporations, boards of directors and property managers in respect to security and safety in condominiums. Read the Toronto Sun article here: “Creepy Yorkville condo stalker terrifies women“. If you require legal advice and representation in respect to condominium disputes, please contact us for an initial consultation.
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