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Shareholder disputes are a frequent source of disputes. A shareholder is a natural or legal person who holds shares in a company, and thus has a pecuniary interest. Controlling shareholders control certain aspects of the company, including financial and operational aspects. Minority shareholders, although they do not have the same power, nevertheless retain significant rights. ABG & CJ represents both shareholders and companies in these complex matters. Here's what you need to know.

Shareholder derivative shares or direct shares

Generally, one or more shareholders, or a shareholder on behalf of a group, may bring an action against decisions or actions taken by directors or officers of the corporation.

A derivative action is a lawsuit brought on behalf of the company to prevent or repair harm suffered by the company. Although it is one or more shareholders who initiate the action, they are acting only in a representative capacity, as the claim and any profits resulting from the lawsuit accrue to the company itself. The shareholder therefore acts as a substitute for the legal person.

Derivative shares have long been recognized as a control tool to deter directors from defaulting on their obligations to the company and its shareholders. These cases often involve allegations of asset squandering, mismanagement, manipulation of share prices, fraud, misappropriation, conflicts of interest, self-dealing or excessive compensation.

Conversely, a direct action concerns a personal injury suffered by the shareholder, distinct from the damage affecting the company. In this case, the applicant must demonstrate that there has been a breach of an obligation directly owed to him. This includes, but is not limited to, contractual obligations arising from shareholder agreements, which govern management, decision-making and approval rights.

A breach of these agreements may result in a claim for contractual damages, including defending the rights of minority shareholders violated by the majority shareholders, legal claims to force the payment of dividends, challenging the issuance of shares that unduly dilute a shareholder's shareholding, protecting voting rights, and providing access to the company's books and records for inspection.

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Allegations of Breach of Duty by Officers and Directors

One of the most common bases of accountability to shareholders is the breach of duty by directors. The directors and officers of a corporation must act in the best interests of shareholders and with loyalty. A lawsuit may allege that the officers acted negligently or in their own self-interest.

In addition to the duty of care, directors are also bound by a duty of absolute loyalty and full disclosure. In the context of mergers and acquisitions, these claims generally relate to a flawed process, an inadequate evaluation of the offer, or a failure to disclose the terms of the transaction.

Alternative dispute resolution

Legal proceedings can be time-consuming and costly. In some cases, going to court is not the best solution, particularly because of the public nature of the legal proceedings, which may expose a company's internal conflicts.

Alternative dispute resolution methods allow shareholders to settle their disputes privately, without unnecessary publicity. Arbitration involves the presentation of arguments before a neutral arbitrator, whose decision is legally binding and binding. Mediation, on the other hand, aims to promote an amicable settlement through a mediator, without a mandatory decision.

Trust abg & cj

Shareholder disputes can arise in a variety of ways. Whether you're starting a business in Montreal and looking to prevent conflicts, or you're facing shareholder litigation in your current business, it's essential to understand the issues and your options.

If you are a shareholder and suspect another shareholder, director or officer of misconduct, it is crucial to know your legal recourse. Whatever the cause of the dispute or the nature of the claim, we are ready to support you.

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SECTORS OF ECONOMIC ACTIVITY

  • Family disputes in agricultural or processing companies.
  • Divergences between partners in cooperatives or integrated agricultural enterprises.
  • Disagreements over intergenerational transmission.
  • Litigation within brokerage firms or insurance companies.
  • Conflictual exit of partners during mergers or customer buyouts.
  • Challenging strategic compliance or investment decisions.
  • Conflicts between founders and investors in trade chains.
  • Disagreements over growth, deductibles, or profit distribution.
  • Disruption of balance in SMEs with closed governance.
  • Disagreements over the management of construction companies.
  • Disputes around contract sharing.
  • Reproaches of management or majority abuse in consortiums.
  • Disagreements over governance or intellectual property rights.
  • Governance disputes in production companies, talent agencies or sports teams.
  • Creative or financial vision conflicts.
  • Disputes between founders or administrators of private schools or specialized institutes.
  • Representation of educational non-profit organizations.
  • Conflicts between shareholders of mining or exploration companies.
  • Governance disputes on strategic investment projects.
  • Disagreements over the granting or management of exploitation rights.
  • Shared governance between partners of processing or green technology companies.
  • Conflicts over the division of responsibilities for environmental compliance.
  • Governance disputes in paramunicipal corporations or Crown corporations.
  • Conflicts related to the representation of divergent interests within public bodies with shared governance.
  • Litigation in property management companies or investment trusts.
  • Shareholder disputes in mixed-use or multi-phase development projects.
  • Disagreements over liquidity or refinancing strategies.
  • Conflicts between partners in financial services firms or wealth management firms.
  • Disputes around the entry or exit of strategic partners.
  • Allegations of abuse.
  • Disagreements over the management of factories or production companies.
  • Conflicts over margins, export or innovation strategies.
  • Unjustified exclusions of founders or co-shareholders.
  • Governance conflicts in private clinics, laboratories or biotech companies.
  • Representation in post-merger control disputes.
  • Challenging restrictive covenants between health professionals.
  • Litigation within private security or cybersecurity firms.
  • Disagreements over contractual orientations or target markets.
  • Conflict management in sensitive or regulated entities.
  • Shareholder disputes in law, accounting or engineering firms.
  • Allegations of dereliction of duty or abuse.
  • Conflictual exits and valuation arbitration.
  • Frequent litigation in start-ups or private technology companies.
  • Disagreements over the management of intellectual property or fundraising.
  • Contestation of dilution or call option clauses.
  • Disputes over the management or transfer of tourist or hotel centres.
  • Disputes related to hotel franchises or partnerships.
  • Contestation of operational or strategic decisions between shareholders.
  • Conflictual governance in land or air transport companies.
  • Disputes between logistics partners or fleet operators.
  • Representation in strategic direction or contract management disputes.
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