In Alberta, corporations are governed by the Alberta Business Corporations Act and/or the Canada Business Corporations Act (depending on whether they have been federally or provincially incorporated).

Both pieces of legislation impose a responsibility on corporations to act as good corporate citizens and consider the interests of shareholders and other relevant corporate stakeholders. Both pieces of legislation also recognize a broad range of corporate misconduct and provide for a range of equitable remedies intended to provide redress for such conduct, such as the oppression remedy.

Where the actions of a corporation negatively impact individuals with an interest in the corporation, such as shareholders, those individuals may have grounds to request an oppression remedy to protect those interests.

The Oppression Remedy

When the conduct of a corporation affects the legitimate expectations of shareholders and other relevant parties, those individuals may be entitled to relief from the corporation’s conduct

The oppression remedy is a personal remedy available to stakeholders, including shareholders, to be asserted in situations where a corporation is unfairly prejudicial or unfairly disregards the interests of the stakeholder.  The complainant sues on behalf of himself for a wrong he suffered personally as a result of corporate conduct.

A claim for an oppression remedy can be asserted by shareholders against other shareholders (minority or majority or equal), officers, directors, or creditors and can cover a huge range of misconduct.

Asserting a Claim for Oppression

In order to assert a claim for oppression, a shareholder must establish that he or she had a “reasonable expectation” in its business relationship with the corporation. This is a fact-specific inquiry dependant upon a number of factors including the nature of the corporation, its past practices, the relationship between the parties (including any agreements between them), and similar.

Once the shareholder has established that they had some reasonable expectation, they must then establish that the corporation’s failure to meet that obligation resulted in detrimental consequences that constituted an oppression of the shareholder’s interest, an unfair prejudice of the shareholder’s interest, or an unfair disregard of the shareholder’s interest.

Broadly these are as follows:

  • Oppression= conduct that is abusive, coercive, an abuse or power, or in bad faith;
  • Unfair prejudice= less culpable behaviour such as providing certain shareholders with a disproportionate financial benefit, wrongfully squeezing out a minority shareholder, and similar;
  • Unfair disregard= the corporation ignores a shareholder’s interests in a way that violates that shareholder’s reasonable expectations (e.g. by reducing their dividend, by failing to prosecute a claim, etc.).

Types of Oppression Remedies

Once a court finds that misconduct has occurred, it has broad discretion to rectify the misconduct and can order various remedies, including:

  • Compensating the oppressed party;
  • Removing and replacing directors;
  • Setting aside a transaction; and
  • Liquidating and dissolving the corporation.

For over 25 years, the lawyers and staff of DBH Law have built strong client relationships and provided our clients with responsive and concise legal advice they can trust. We take a pragmatic approach to the law and give our clients practical solutions tailored to their specific corporate law needs. Contact us online or by phone at 403.252.9937 to learn how we can help you today.