Start with the company documents
Before deciding who is right, identify the legal structure and the documents that govern it. Review the articles, incorporation records, central securities register, shareholder agreement, unanimous shareholder agreement if one exists, directors' resolutions, financing documents and relevant employment or consulting agreements.
The dispute may look like a personal breakdown but still turn on voting rights, director powers, dividend policy, transfer restrictions, information rights or contractual exit provisions.
Common shareholder conflict patterns
Deadlock
Equal owners may be unable to approve budgets, hiring, financing, distributions or a sale. A well-drafted agreement may contain a deadlock mechanism. Without one, the practical and legal options can be much harder.
Exclusion from management or information
One owner may allege that they have been frozen out of decisions, denied records or removed from a role they expected to hold. Employment rights and shareholder rights are not necessarily the same, so both sets of documents may matter.
Related-party payments and diversion of opportunity
Conflicts can arise over salaries, management fees, personal expenses, transactions with related companies or allegations that a business opportunity was redirected elsewhere. Preserve accounting records and avoid altering corporate records once a dispute is foreseeable.
The B.C. oppression remedy
Section 227 of B.C.'s Business Corporations Act permits a shareholder to apply to court where company affairs or director powers are exercised in a manner that is oppressive to a shareholder, or where an act or shareholder resolution is unfairly prejudicial. The available orders are broad, but whether the remedy applies depends on the facts and legal expectations involved.
Not every disagreement is oppression. A lawyer will usually examine corporate documents, the history of the relationship, representations made between owners and the practical effect of the challenged conduct.
Possible resolutions
Many disputes resolve through negotiated governance changes, a share purchase, a sale of the business, repayment arrangements or a structured separation. Litigation may be necessary where records are withheld, assets are at risk or negotiated solutions fail. The best route depends partly on whether the owners want to preserve the company or end their relationship.
Documents to organize
- Shareholder and partnership agreements.
- Articles, incorporation records and securities registers.
- Financial statements, bank records and tax information.
- Board and shareholder minutes or resolutions.
- Emails or messages concerning ownership expectations and disputed decisions.
- Any valuation, financing or purchase proposals.
Related guides
See Burnaby business law for governance and transaction basics, civil litigation for dispute process, and buying a business if a buyout or third-party sale becomes part of the solution.