Oppression remedy guidelines – Canada Business Corporations Act

Table of contents


Section 241 of the CBCA gives a "complainant" the right to bring a court action against a corporation where conduct has occurred which is oppressive, unfairly prejudicial or which unfairly disregards the interests of a shareholder, creditor, director or officer. This right is commonly referred to as the "oppression remedy". The oppression remedy has been interpreted by courts and commentators as imposing a general standard of "fair" conduct on each CBCA corporation and its management. When this standard has been breached, complainants may apply to court for an order rectifying the oppressive conduct. The court may make any order it thinks fit, including awarding money damages, appointing a receiver, dissolving the corporation, forcing the acquisition of securities and amending charter documents.

Potential complainants under the oppression remedy are shareholders (present and past), directors and officers of a CBCA corporation or its affiliates, the Director appointed under the CBCA and any other person the court decides may properly make an application.

Purpose of guidelines

These guidelines are intended to clarify the limited circumstances in which the Director may decide to participate in an oppression action. Persons considering asking for the Director's assistance should use these guidelines both as an indicator of whether or not their situation is an appropriate case to present to the Director, and as a tool for determining what information the Director's staff will need to receive in order to determine if the complaint warrants further review. This document is limited to a discussion of when the Director may be inclined to make an application to court; it does not purport to define what constitutes oppressive conduct on the part of a corporation or its management.

Background to guidelines

In March of 1995, the Director released and consulted upon a discussion paper on the Director's potential role in oppression cases. Although extremes of opinion were expressed on many of the issues raised in that paper, consensus was reached on two critical points.

First, consultation confirmed and supported the Director's past practice of only infrequently becoming involved in the affairs of a corporation or its management through a section 241 action, and generally only participating in extraordinary cases. This infrequency is primarily a result of the self-enforcing philosophy behind the CBCA.

Second, because the Director's involvement in an oppression case is always discretionary and must not be restricted in any way, there was agreement that it would be inappropriate and inadvisable to set out precise criteria which, when satisfied, might seem to require the Director to become involved in a section 241 action.

Although the Director's discretion will not be constrained in any manner, it is recognized that a listing of the factors that are taken into account in deciding on the Director's involvement in section 241 proceedings may be of use to persons who are considering asking for assistance.

Research and consultation have identified a number of these factors, some of which are listed below. While there is no formula to weight the relative importance of these factors, it is acknowledged that certain criteria may be more compelling than others. It is also important to note that the factors set out in these guidelines will rarely exist independently of each other. However, in the final analysis, the Director's decision on whether or not to become involved in an oppression action will be based on an analysis of all relevant factors, including those discussed below.

Factors relevant to director's decision to exercise discretion

When attempting to determine whether the Director may decide to exercise the discretion available under section 241 of the CBCA, it is important to remember that the definition of "complainant" in that section is extremely broad and includes "any interested person". This is consistent with the primarily self-enforcing nature of the statute. In an oppression action, all complainants have all of the procedural rights available to the Director. In general, therefore, the Director will only become involved where the person complaining of oppressive conduct has, for good reason, not accessed those rights and the proceedings are, in the Director's opinion, justified on the basis of factors such as those set out below.

  1. Seriousness of Conduct. The degree to which the interests of shareholders or other interested parties appear to have been unfairly disregarded, or to which provisions of the CBCA have been breached, will influence the Director's determination of whether or not to intervene under the oppression remedy.
  2. Deterrence. In cases where the Director's intervention may attract media attention and public notice, thereby helping to deter the conduct that is the subject of complaint, the Director will be more inclined to act. This is a significant factor in cases where the Director is aware of actual or suspected widespread infringement of the statute.
  3. Clarification of Case Law. Where the involvement of the Director could help to clarify unresolved corporate law issues, the Director will be more inclined to act.
  4. Availability of Other Law Remedies. While not necessarily favouring shareholders over other classes of complainants, the Director will likely be less inclined to act where other corporate or non-corporate law remedies are available, such as proceedings to enforce the contractual rights of a complainant.
  5. Availability of Alternate Resolutions. The Director will consider, both for a private and a public company, whether a simple exit through the sale of shares would be a more efficient and fair manner of dispute resolution than costly litigation. Where a market offering fair value for the shares exists, but the party complaining of the oppressive action chooses not to access it, the Director may be less inclined to act. On the other hand, the existence of such a market will not, in and of itself, necessarily dissuade the Director from taking action. Similarly, where other procedural means are available to assist a complainant, the Director may decline to become involved. For example, where a jurisdiction allows class action suits and/or contingency fees for legal advisors, the general ability of potential plaintiffs to commence litigation is increased and the Director's intervention may be less necessary. Conversely, where procedural hurdles make pursuing a claim more difficult, the Director may be more willing to act.
  6. Absence of or Actions by Other Parties. The Director will consider whether other persons involved with the same corporation or management have joined forces in order to prosecute or resolve their dispute. Where a concerted effort is already underway to address the conduct that is the subject of the complaint, the Director may suggest that complainants join that effort.
  7. Economic Consequences. The Director may or may not be influenced by the value of the investment that a complainant alleges is at risk. While the amount of money involved may be significant to a particular corporate participant, the Director is not likely to be persuaded by this factor in the absence of other compelling circumstances. At the same time, however, where an aggrieved party does not have sufficient means to initiate proceedings (such as in the case of a cash-rich corporation whose investors are faced with losing what is, to them, a substantial sum of money but who do not individually, or even collectively, have sufficient funds to pursue litigation), the Director may be more inclined to intervene.

Initiation versus intervention

Complainants occasionally ask the Director to intervene in an ongoing proceeding, either in favour of the complainant making the request, or as a friend of the court. However, most of these requests are for the Director to initiate an action. In other words, the request is for the Director to act as plaintiff. Regardless of the nature of the request, however, the Director may decide to seek only the right to intervene in an action. In this way, the Director's evidence or submissions can be strictly limited to issues that are considered compelling. Since intervention can be a cost-effective way in which to address such key issues, the Director will tend to favour this approach, where it is available. In such cases, individuals seeking the Director's help would bring an action as plaintiff and the Director would seek to intervene in that action.


Although the presence or absence of any or all of the above factors may be persuasive, it is important to remember that this alone will not determine how the Director will exercise the discretion available under section 241. It is also worth noting that the Director only infrequently becomes involved in section 241 oppression actions. Despite these cautionary notes, individuals who are seeking the Director's assistance should continue to be mindful of the importance of these factors to the Director's deliberations and provide information addressing those that are directly applicable to their complaint.

Formal requests for assistance under section 241 must be presented, in writing, either to the Director or to the Deputy Directors. Requests must contain a complete and comprehensive description of the alleged oppressive conduct, and must be accompanied by any available supporting evidence.

Note that these guidelines are not intended to substitute for professional legal, accounting or business advice, nor for the exercise of professional judgment by legal, accounting or business advisors. This document may be amended from time to time to reflect experience with its application and new developments in the law.