What is the corporate Oppression Remedy?

The oppression remedy, in the corporate context, is a statutory right found in business corporate legislation that allows a complainant to bring a court action against a corporation where conduct has occurred which is oppressive, unfairly prejudicial or which unfairly disregards the interest of a shareholder, director, officer or creditor. The oppression remedy has been interpreted by courts and legal commentators as imposing a general standard of “fair“ conduct on the corporation and its management. When the standard has been breached, complainants may apply to a court for an order rectifying the oppressive conduct. The court may make such order as it deems appropriate in the circumstances, including: restraining or prohibiting certain actions or conduct; appointing a receiver; regulating the corporation's affairs; directing an issue or exchange of shares; appointing new directors to replace, or in addition to, existing directors; ordering the corporation or any other person to purchase part or all the shares of a complainant; varying or setting aside a transaction or contract to which the corporation is a party; requiring the corporation to produce financial statements within a specified time period; ordering compensation for an aggrieved person; directing rectification of the corporation's registers or records; directing dissolution of the corporation; directing an investigation; and requiring the trial of any issue. Potential complainants under the oppression remedy can be shareholders [both present and past], directors and officers of the subject corporation or its affiliates, the Director appointed under the applicable business corporations act and any other person the court decides may properly make an application. The court determination of an oppression remedy is resolved largely by an examination of the parties’ reasonable expectations. Reasonable expectations have been described as the “touchstone to entitlement to compensation for oppression”. (Ford Motor Co. of Canada v Ontario Municipal Employees Retirement Board). This is a question of fact that can factor in personal considerations. An important consideration is the distinction between the oppression remedy and a derivative action, which was addressed in the Ontario Court of Appeals decision in Rea v Wildeboer, where the court asserted that for the oppression remedy to apply the impugned conduct must harm the complainant personally, not just the body corporate, i.e., the collectivity of shareholders as a whole. The oppression remedy is not available simply because a complainant asserts a “reasonable expectation“ [for example, that directors will conduct themselves with honesty and probity and in the best interest of the corporation] and the evidence supports that the reasonable expectation has been violated by conduct the falling within the terms “oppression“, “unfair prejudice“. That the harm must impact the interest of the complainant personally – giving rise to a personal action - and not simply to complainant’s interests as a part of the collectivity of stakeholders as a whole - is consistent with the reforms put in place to attenuate the rigours of the rules in Foss v Harbottle. The oppression remedy must be a personal or individual remedy, as opposed to a corporate remedy that is to be pursued as a derivative action. #corporatelaw #oppressionremedy