Breach of Shareholder Agreements

Disputes involving shareholders can have serious ramifications for not only the shareholders but also for the corporation. Consequences of shareholder disputes often include an inability or obstruction in carrying on business, a loss of revenues, damage to reputation, and a loss of confidence in the managing minds of the business.

Litigation involving shareholders can arise from a multitude of circumstances. Common examples include:

• Breach of fiduciary duty
• Asset sale or purchase transactions 
• Illegal removal of company funds
• Removal of a director or officer
• Personal liability of directors or officers
• Fraudulent misrepresentation or deceit
• Misrepresentations of the company’s finances 
• Disagreements regarding corporate management
• Unfair treatment 
• Breach of non-competition or non-solicitation clauses
• Dissolution, liquidation or winding-up of a company
• Application of a shotgun or buy-sell clauses
• Share valuation
• Sale of a company
• Oppression of minority or majority shareholders

Outside of shareholder agreements, shareholders also have rights and remedies under legislation such as the Canada Business Corporations Act and Ontario’s Business Corporations Act. Examples of such rights include:

• An accounting of the business and its affairs
• An investigation in the company
• Compelling a person to attend a hearing 
• Setting the compensation for an inspector or replacing an inspector
• Production of documents to an inspector
• Giving directions to an inspector on any matter arising in an investigation