Legal-Ease by Ian MacKinnon
If you own shares in a B.C. company, and you are not being treated fairly by the other shareholders, officers, or directors, you certainly should be aware of your legal rights.
There are approximately 325,000 active companies registered in British Columbia. When disputes arise between shareholders, remedies can be found in the shareholder’s agreement and/or the Business Corporations Act.
Shareholders agreements can be very useful in either resolving shareholder disputes or limiting their scope. Surprisingly, only a small percentage of companies actually have shareholders agreements.
Shareholders are entitled to apply to the B.C. Supreme Court if they are being “oppressed” or “unfairly prejudiced.”
A shareholder may apply for a court order on one of the following grounds:
The affairs of the company are being or have been conducted (or the powers of the directors are being or have been exercised) in an “oppressive” manner; or
Some act of the company has been done (or is threatened), or some resolution of the members has been passed (or has been proposed), that is “unfairly prejudicial” to one or more of the shareholders.
Oppressive conduct is described as “burdensome, harsh and wrongful, or lacking in fair dealing.” The oppression must be conduct affecting a shareholder in his or her capacity as a shareholder.
Unfair prejudice imports a lesser threshold. It means corporate conduct that is unjustly or inequitably detrimental to the legitimate interests of a shareholder.
The court has a broad power to remedy oppressive or unfairly prejudicial circumstances. The most common order of the court is for the complaining party to be bought out as a Shareholder.
The Business Corporations Act provides many other remedies for disgruntled shareholders.
If you are a shareholder in a B.C. company and believe that you are being treated unfairly, refer to your shareholder’s agreement and contact a lawyer.
Ian MacKinnon is a partner with RDM Lawyers in Abbotsford and Mission. Ian practices in the areas of civil and commercial litigation. If you have questions or comments about this article, email email@example.com.