What the oppression remedy does

Section 241 of the Canada Business Corporations Act (and equivalents in provincial corporate statutes) gives stakeholders a broad personal remedy where corporate conduct is "oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer."

The remedy is unique among corporate-law tools: it bypasses the rule in Foss v Harbottle that requires shareholder claims to be derivative.

The BCE framework

BCE Inc v 1976 Debentureholders (2008) restated the test:

Identify the claimant''s reasonable expectations, assessed objectively by reference to the surrounding circumstances.
Determine whether the impugned conduct breached those expectations in a way that was oppressive, unfairly prejudicial, or unfairly disregarded the claimant''s interests.

Reasonable expectations

Sources include:

The constating documents and shareholder agreements.
The history of the relationship.
Industry practice.
The size and nature of the corporation.
Public representations made by management.

A claimant cannot manufacture an expectation contrary to the constating documents. Public corporations involve different expectations from closely-held corporations.

Oppressive, unfairly prejudicial, unfairly disregards

These are alternative grounds, increasing in flexibility:

Oppressive: burdensome, harsh, wrongful conduct (highest threshold).
Unfairly prejudicial: less serious mistreatment.
Unfairly disregards: indifference to the claimant''s interests.

The court selects the appropriate ground for the conduct.

Remedies

Section 241(3) lists broad remedies: amend the bylaws; appoint receivers; direct an issuance or exchange of securities; require the corporation or any other party to compensate the aggrieved person; and any other remedy the court considers fit. Wilson v Alharayeri (2017) confirms personal liability of directors is available where they have benefited or breached their duties.

Where directors'' fiduciary duty fits

BCE made clear that directors'' fiduciary duty under s.122(1)(a) is owed to the corporation, not to particular stakeholders. The oppression remedy is the appropriate avenue for stakeholders complaining of unfair treatment — fiduciary doctrine cannot be re-routed into stakeholder claims.

Common errors

Claiming oppression on the basis of mere disagreement with corporate strategy. The conduct must engage reasonable expectations and constitute one of the three grounds.
Confusing oppression with derivative actions. Oppression is personal; derivative actions vindicate the corporation''s interests.
Pleading oppression without identifying the source of the reasonable expectation. The expectation must be objectively grounded.

The Oppression Remedy