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Shareholder Disputes

What can you do when shareholders fall out?

What you can do depends almost entirely on whether there is a shareholder agreement. With one, the exit, valuation and deadlock mechanisms usually govern. Without one, Canada's oppression remedy is broad — courts can order a buyout, remove directors, or wind up the company — but it is expensive and the outcome is far less predictable than a contract.

What to do next

  1. Find and read the agreement

    Shareholder agreement, unanimous shareholder agreement, or the articles. Look for shotgun clauses, buy-sell mechanics, valuation methods, and drag or tag rights. These often resolve the dispute without litigation.

  2. Secure your access to information

    Shareholders have rights to certain corporate records and financial statements. If you are being shut out of information, that itself is evidence of oppression and should be documented.

  3. Document the conduct, not the grievance

    Oppression turns on conduct that is oppressive, unfairly prejudicial or unfairly disregards your interests — excluding you from management contrary to expectations, diverting opportunities, paying excessive compensation. Specific instances with dates carry the claim.

  4. Get a valuation before negotiating an exit

    Most of these resolve as a buyout. Going in without an independent valuation means negotiating blind, and the valuation method in the agreement may itself be contestable.

Frequently asked questions

There's no shareholder agreement — what now?

The oppression remedy is available and broad, and courts have wide discretion including ordering a buyout. But it is slower, costlier and less predictable than enforcing a written agreement.

Can I force the other side to buy me out?

A court can order a buyout as an oppression remedy, and many agreements contain shotgun or buy-sell mechanisms that achieve it faster. Check the agreement first.

Can I be removed from the company?

Removal as an employee or director is different from losing your shares. Being pushed out of management while retaining shares is a classic oppression fact pattern.

What is a shotgun clause?

A mechanism where one shareholder names a price and the other must either buy or sell at it. Powerful, and dangerous if triggered without understanding the consequences — get advice before firing one.

This is general information, not legal advice. Laws vary by location and every situation is different — speak with a qualified lawyer about your specific circumstances.

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