Oppression Remedies In BC Law
Oppression remedies are focused on ensuring fairness to shareholders affected by oppressive acts of a corporation or its directors. The remedies for oppression, unfair prejudice, or unfair disregard of relevant interests, are governed by legislation in British Columbia by the Business Corporations Act, SBC 2002, c 57.
When claiming oppression, unfair prejudice, or unfair disregard of relevant interests, the facts are vital in determining if you are entitled to any relief. The court will consider the shareholder’s reasonable expectations based on the specific context and relationships. A court determining potential oppression must answer two questions:
- Has there been a violation of your reasonable expectation about how the company conducts its business?
- Was your expectation violated by conduct that was oppressive, unfairly prejudicial or because the conduct unfairly disregarded your interests as a shareholder?
Determining your reasonable expectation includes:
- consideration of general commercial practice;
- the nature of the company;
- the relationship between the parties;
- past practice;
- steps the shareholder could have taken to protect himself or herself;
- representations and agreements; and
- the fair resolution of conflicts between corporate stakeholders.
Once you establish a violation of reasonable expectations in the circumstance, you still have to satisfy the second question, namely, that your expectation was violated by oppressive conduct, unfair prejudice, or unfair disregard of relevant interests.
Oppressive or Unfair Conduct
Oppressive conduct is sufficiently serious if it is burdensome, harsh or wrongful; it may not necessarily be illegal or an invasion of legal rights but must be reprehensible. There must be some aspect of the conduct against you that is injurious and wrong. Unfair prejudice may be less deserving of blame but still has unfair consequences. Unfair disregard of interests can happen where a shareholder’s interests are ignored contrary to their reasonable expectations. There also needs to be a causal connection between the impugned conduct and the outcome on which the complaint is based. To be considered oppressive, unfair and injurious, the conduct must directly cause the claimed injury. Examples of oppression include:
- majority shareholders voting in a self-interested manner and oppressing minority shareholders;
- majority shareholders managing the corporation for personal gain; and
- majority shareholders preventing minority shareholders from participating in the corporation’s profits.
If oppression, unfair prejudice, or unfair disregard of interests is established, then the court may make any interim or final order it deems appropriate within the broad framework of the Business Corporations Act (B.C.). The Business Corporations Act provides a long list of possible oppressive remedy orders at s. 227(3), and examples include:
- directing or prohibiting actions and conduct;
- regulating the company’s affairs;
- appointing new directors to replace, or in addition to, existing directors;
- ordering the company or another shareholder to purchase part or all the shares of a shareholder;
- varying or setting aside a transaction or contract to which the company is a party;
- appointing a receiver or receiver-manager; and
- directing dissolution of the company.
An oppression claim proceeds quite quickly at court when compared to a typical lawsuit. It can be launched and heard in a matter of weeks or a few months. It does not have the same document production or oral discoveries of a normal lawsuit, so it is usually much less expensive to undertake. If you are unable to work things out through negotiations, an oppression action can be very worthwhile.
Learn more about shareholders on our website by visiting our page on Minority Shareholders.