CANADA Law and Practice Contributed by: Sarah Gingrich, Sean Stevens, Tracy Hooey and Marie-Josée Neveu, Fasken
Oppression Claim An oppression claim is unique to Canadian corporate law and is a broad and potentially powerful statutory remedy that grants the court wide discretion in devis - ing any resulting relief. In brief, an oppression claim enables shareholders – as well as other security hold - ers, creditors, directors or officers – to seek judicial intervention where they believe the company (or its directors or officers) have acted in a manner that is oppressive or unfairly prejudicial or that unfairly dis - regards the claimant’s interests. Conduct that can give rise to oppression includes actions contrary to the company’s governing documents, actions con - trary to the directors’ fiduciary duties, and/or actions that disregard or undermine the claimant’s legal rights or interests. Unlike a derivative action, a shareholder need not first seek court approval to bring an oppres - sion claim, with the result that an oppression claim (or the threat of an oppression claim) is often the first recourse of a disaffected shareholder in Canada. 4.5 Shareholders in Publicly Traded Companies Disclosure obligations can arise for shareholders in Canadian public companies in several different cir - cumstances. Canadian securities laws generally require that “insid - ers” of Canadian public companies file reports dis - closing information regarding transactions involving the company’s securities. The term “insider” is broadly defined and includes persons who have significant influence over the company and/or routine access to material undisclosed company information. This also includes the company’s officers and directors (as well as those of the company’s subsidiaries) and the company itself where it has purchased, redeemed or otherwise acquired some of its own securities and significant shareholders (ie, 10% shareholders). Insider reports must disclose, among other things, (i) the insider’s direct or indirect beneficial ownership of, or control or direction over, company securities; and (ii) any change to the foregoing. Separate and sup - plementary insider reporting requirements exist for derivatives. Various exemptions from Canadian insider reporting requirements are available depending on the circumstances.
Should a shareholder acquire a 10% or more inter - est in a Canadian public company, the early warning reporting (EWR) system under Canadian securities laws is triggered. This requires the shareholder to: • issue a news release before the opening of trading on the next business day; • file an early warning report within two days of the 10% threshold being crossed; and • not acquire additional shares from the time the reporting requirement is triggered until at least one business day after the early warning report is filed. Prescribed information for disclosure includes the amount of the shareholding and the shareholder’s investment intent. Additional news releases and early warning reports are required thereafter: • each time the shareholder increases or decreases its shareholding by 2% or more; • for every change in material information contained in a previously filed report; and • should the shareholder’s ownership percentage fall below the 10% threshold. The reporting threshold under the EWR system drops from 10% to 5% if the public company becomes the target of a takeover bid. The Investment Canada Act (Canada) and Competi - tion Act (Canada) have thresholds for the acquisition of shares (33.33% and 20% respectively) of a Cana - dian public company that could trigger considerations under these statutes. Finally, any acquisition of shares in a Canadian public company by a shareholder that, together with the shareholder’s current interest (if any), would bring the shareholder’s interest to 20% or more must comply with Canada’s takeover bid regime. 5. Corporate Reporting and Disclosures 5.1 Financial Reporting Requirements Canadian public companies are required to file several annual financial reports. These include the following:
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