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August 2017

Shareholder disputes: court-ordered investigations

Minority shareholders sometimes grow frustrated with the direction the majority are taking the company, and with their inability to effectively oppose such direction. Frequently the frustration relates to a lack of transparency: the minority feel on the outside, looking in, with regard to the affairs of the company.

Insolvency -- set-offs vault over court stays

When an insolvent company seeks creditor protection through the courts, all claims against the company are stayed and cannot be pursued. If the company restructures, unsecured creditors will normally see their claims against the debtor sharply reduced and repayment periods extended. If the company is assigned into bankruptcy, unsecured creditors will often receive pennies on the dollar or see their claims go entirely unpaid.

Insolvent Individuals

An individual may become insolvent for a variety of reasons. For many people, it may be a matter of over use of credit cards or other credit facilities. For the individual who owns or operates a business, if the business becomes insolvent, the individual may also find himself or herself to also be insolvent. Regardless of the reasons for insolvency, there are options available for individuals under the Bankruptcy and Insolvency Act (the “BIA”).

Shareholder rights

Beyond the entitlements set out in shareholder agreements and corporate bylaws, shareholders have certain rights spelled out in the Business Corporations Act of British Columbia (BCA). Under the BCA, shareholders have the right to vote at an annual general meeting on: resolutions governing the activities of the company; the election of members to the board of directors; and, whether to have the company's financial statements audited.

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