CHAPTER 02 Bulletproofing Your Board Against Oppression Claims
Spotlight: Oppression Versus Other Causes of Action
Oppression claims are similar to, and are often pursued in conjunction with, other causes of action, including the following: – Derivative actions . A derivative action is a claim brought by a shareholder on behalf of a corporation, typically against an officer or director for alleged breach of duty to the corporation. Derivative actions can only be commenced with the specific leave (or permission) of a court. When an impugned action, decision or transaction giving rise to an oppression claim has affected all shareholders generally, rather than prejudicing the complainant specifically and uniquely, a court may dismiss the oppression claim on the basis that it properly constitutes a derivative action for which leave was not sought. – Securities proceedings . Securities regulators and stock exchanges have jurisdiction over a range of issues relating to, among other things, the sufficiency and timeliness of public disclosure as well as the fairness of defensive measures against takeover bids. Securities proceedings and oppression remedies can sometimes proceed in parallel and raise overlapping issues. – Securities class actions . Securities legislation in each province creates a statutory cause of action that allows a “representative plaintiff” (putatively acting on behalf of some or all of a company’s securityholders)
to bring a class proceeding against the reporting issuer, its directors and other parties on the ground that the company’s mandatory public disclosure has been false, inadequate or misleading. – Civil liability (breach of contract or tort) . When a complainant’s “reasonable expectations” are based on a contract or on representations made by the company or individual officer or directors, the complainant may also state claims for breach of contract and/or tort (such as negligent misrepresentation, fraud, conspiracy and intentional interference with economic relations). – Plan of arrangement . When a corporation seeks court approval for a plan of arrangement, a shareholder or creditor whose rights are being “arranged” may challenge the plan on the basis that it is not fair and reasonable. – Dissent proceedings . When a corporation undertakes certain major transactions affecting its capital structure (such as through an amalgamation, plan of arrangement, going-private transaction or squeeze- out transaction), a shareholder can sometimes exercise “dissent rights” and demand that its shares be redeemed for fair value as determined by a court.
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