Shareholder Dispute

Shareholder disputes refer to disagreements between shareholders over their rights obligations or shares in a corporation. Disputes over ownership, money management decisions or violation of shareholder agreements are usually the reason for these disagreements.

In Canada the following are significant features of Shareholder Disputes:

1) Governance and Legal Framework: In provinces such as British Columbia, conflicts are regulated by the British Columbia Business Corporations Act (BCBCA) which provides procedures for conflict resolution such as court orders for winding up the corporation or directing the acquisition of shares.

2) Common Causes: Conflicts usually revolve around matters like conflicts of interest for shareholders, the appointment or dismissal of directors, the allocation of profits and management of the business.

3) Protecting Minority Shareholder Rights: The oppression remedy is a vital piece of legislation offered by the federal and provincial Business Corporations Acts. It enables minority shareholders to seek redress if other directors or shareholders behaviour is unfairly discriminatory or ignores their interests. To establish that, such conduct does not live up to their reasonable expectations, the claimant must furnish evidence.

4) Alternative Dispute Resolution (ADR) Techniques: ADR techniques such as arbitration or mediation are normally required in shareholder agreements. Even with the use of arbitration clauses, some disputes will still go to trial particularly when there is oppression alleged.

5) Resolution Options: These are such things as examining shareholder agreements, organizing meetings, calling in mediators or other directors, organizing buyouts or forced sales of shares, corporate dissolution and as a last measure taking matters to court or arbitration.

Following are Canada’s common causes of Shareholder Disputes:

1) Strategic disagreements: Contrasting views regarding the direction and strategy of the company like business plans, business goals or key decisions like mergers and acquisitions.

2) Concerns about leadership and management: Disputes concerning the officers and directors’ fiduciary duties or judgment including allegations of incompetent management or conflicts of interest.

3) Breach of fiduciary duty: Claims that directors or controlling shareholders exploited minority shareholders or discriminated against them unfairly or did not act in the company’s best interests.

4) Financial disputes: Disputes related to capital contributions, tax settlement, distribution of profits, financing or disclosure of money are termed as financial disputes.

5) Power and rights of the voters: Bias treatment or disenfranchisement are relevant concerns for voting rights.

6) Definition conflicts or uncertainties in words like buy-sell and exit plans are responsible for shareholder agreement disputes.

7) Minority shareholder oppression: When minority shareholders feel that management or majority shareholders are marginalizing or treating them unfairly.

8) Share pricing and valuation: Conflicts arising from buyouts or share transfers that occur when liquidity is high.