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Oct 23, 2013
A&B Wins in Oppression Case
Don Jack and Sanj Sood, with assistance from Donald Johnston and Jeremy Nemers, successfully defeated an application for oppression pursuant to s. 248 of Ontario’s Business Corporations Act
Certain minority shareholders in a privately-held corporation claimed that its 2013 annual general meeting was improper, that its new board of directors was invalidly-constituted, and that a proposed sale of shares to a purported non-arm’s length investor would violate two agreements and shareholders’ reasonable expectations. In dismissing the application in its entirety, the Honourable Justice Mesbur of the Superior Court of Justice (Commercial List) held that the selling shareholder was not bound by any agreements, and in any event, that the proposed purchaser was acting at arm’s length. Her Honour further held that the annual general meeting was properly called and that the board was validly-constituted to approve the sale.
Of particular significance was Mesbur J.’s holding that “[i]t cannot be a reasonable expectation for a company to continue in conflict and deadlock.”
The decision brings the respondents one step closer to approving the share sale and bringing new life to the corporation.