Where shareholders raise complaints about the conduct of a company's affairs, they typically face a choice of two remedies under corporate legislation: oppression proceedings or a derivative proceeding.
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.
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.
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”).
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.
When a company's decisions are unfair or prejudicial to certain shareholders, those shareholders may be able to get relief by using the "oppression" remedies available under the British Columbia Business Corporations Act.