Having a business in the region of Toronto requires you to be ready to face any eventuality that can occur. Although nobody wishes for it, a dispute with a client or a partner likely gets worse.
In the case of a disagreement, the best option is always to resolve the conflict with the other party. Nonetheless, this may be simply not possible. In that case, arbitration can be an option.
However, if your contract with the other person does not mandate the resolution through arbitration, nobody can force the other party to join you. If so, the other possibility is to go in front of a judge.
No matter your situation, one thing is sure: the help of a corporate litigator can truly be a game-changer for you and your business. However, not every lawyer fits your circumstances. Thus, you need to be able to identify the right one.
JuriGo helps you find the top corporate litigator for your business in the region of Toronto!
What Is Corporate Litigation?
Whenever we talk about corporate litigation, it mostly concerns disputes where at least one party is a business entity. For instance, it can be a joint venture, a corporation or a partnership between individuals.
Furthermore, corporate litigation is a civil case. Therefore, it does not involve any criminal charges. That means that the main objective is to resolve the issue and compensate the party that suffered damages.
It can also involve issues between parties within the same corporation. For example, if a shareholder of the company doesn’t agree with a decision and seeks remedy, the person could hire a corporate lawyer.
| Good to know! Corporate litigators are only involved when there is an actual dispute between parties which leads to a litigation. If you want to incorporate your business or prepare a shareholder agreement, a corporate law firm can still be of great use! |
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This could also be the case if one of the administrators (or a director) abuses his power for personal advantages, taking an opportunity away from the corporation and thus, the shareholders.
Solicitor, Barrister, Lawyer – What Is the Difference?
If you are in Toronto or anywhere else in Ontario, you may have heard any of those terms. However, in reality, lawyers are barristers and solicitors. This is true for the whole province.
As you may know, lawyers normally specialize in a specific area of the law. Therefore, they will offer some legal services. In other words, not every lawyer can help you if you have corporate litigation.
Hence, although you might see those titles and wonder if one is more useful than the other, you should mostly focus your research on the specialization rather than the title. This will put all the chances on your side to find a good solution for you.
Shareholder Disputes: How to resolve it With a Lawyer?
Having a corporation in Ontario also means that you will have to handle potential disputes between shareholders. Although you might think this isn’t a big problem for your business, it can truly disrupt internal affairs and lead to heavy consequences.
This is particularly the case when controlling shareholders do not agree about management decisions or when there is a lack of transparency or a conflict of interests among directors of the corporation.
The manner of reason behind the dispute is often caused by the lack of balance between the parties. If a shareholder has a lack of access to information, it can cause disagreements between the parties.
In such a situation, the first thing to do is to verify if you have a shareholders agreement. This legal document could be of great help as it normally spells out all the rights and obligations of the shareholders.
In other words, they will be aware of what they can do regarding the operation of the corporation. Also, a good shareholders agreement indicates the solutions to resolve any issues among shareholders.
If this document is well written from the start, it will be a lot easier to determine whether or not a shareholder is currently violating the terms of the agreement. It will also be possible to establish the responsibility of the parties.
Hence, if litigation between the corporation and a shareholder starts, the litigators first step will be to read this document thoroughly. It will allow him to understand all the duties of the shareholders as well as the management team of the corporation.
Exit Options for Shareholders – What Are They?
Whenever such litigation gets worse, it is possible that the shareholder needs to end their business relationship with the corporation. In that case, the agreement can also establish the procedure to follow. Whether he buys or sells shares of another party, it is important to know what they need to do in order to have great oversight.
When the dispute is already occurring, it might be particularly difficult for the parties to agree on a specific situation. That is also true if lawyers are involved in the process. With an agreement that is agreed upon before such a situation occurs, you make sure that it is resolved as quickly as possible.
| Did you know? When a lawyer is hired by the corporation, their client is the corporation and nobody else. Therefore, they do not have to protect the interests of nobody else within the company, even the directors and the administrators. |
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Suppose you are currently looking at exit options for a shareholder. In that case, most corporations look at those 2 options to be added to their shareholders’ agreements or the last one which can also be used in some rarer cases:
- The Shotgun Clause,
- The Valuation, and
- The Sale of the Business
Firstly, regarding the shotgun clause, is a procedure that forces both shareholders involved in the dispute to sell to the other its shares at a designated price. The shareholder that uses the clause will give a price for the purchase of the other shareholders’ shares. This one will then decide if he wants to buy or to sell at this price.
Secondly, another common method that helps the shareholders agree on a price is with a clause to force the help of a professional business valuator to determine the value of the shares. Indeed, it is also possible to determine someone in advance whose role will be to find a fair price for the shares.
Lastly, when you didn’t plan anything in your shareholder agreement, another option (which is rarely adequate) is to simply sell the business. However, this is not necessarily recommended as the dispute can persist after the sale and thus, you will still have to work on it afterwards.
Hence, the first thing to do is to verify if you currently have a shareholders agreement within your corporation. If not, a lawyer specialized in corporate law will be more than handy to be sure that the agreement covers everything.
Then, once the issue occurs, corporate litigators can be of great help. This professional will not only make sure that the agreement is properly applied, but he will also be there in the event the issue gets worse and where the corporation requires legal representation in front of an arbitrator or a judge.
Find the right lawyer for you with the help of JuriGo! All you need to do is to fill out the form and we take care of the rest.
How to Use a Legal Oppression Remedy?
No matter the agreement within your corporation, it is possible, in some cases, that it does not resolve the dispute. For instance, this could be the case when a shareholder makes those allegations:
- Misappropriation of funds,
- Objectionable valuation processes, and
- Unfair advantage of controlling positions.
If the dispute persists, mediation can be a good option. However, it is also possible for the shareholders to address the court (or binding arbitration). Having a clause in your shareholder agreements forcing the arbitration route can be of great use to reduce the cost of such an issue.
No matter if the business is incorporated under federal or provincial law, those allegations are generally based on what we call an oppression remedy, which is a broad legal remedy accessible to shareholders.
In that case, the plaintiff will have the burden to demonstrate that the other party is being oppressive in their interests while being unfairly prejudicial or disregarding the interest of the corporation.
Furthermore, he will have to provide evidence that there was a reasonable expectation in relation to the financial or managerial aspects in dispute. With a long list of case decisions, courts have established that multiple situations amount to an oppressive conduct, notably:
- Misappropriation of company assets,
- Failing to consult minority shareholders in crucial decisions,
- Diluting minority shareholder’s rights without their consent,
- Making decisions that only benefit a small group at the expense of others, and
- Paying excessive remuneration to some shareholders.
When the court agrees with the claim, the aggrieved shareholder will have the right to seek different types of relief. This will greatly help to regulate the conduct of the corporation. In some more extreme cases, it could simply dissolve it.
Keep in mind that this remedy is made by the shareholder as a representative of the corporation. In other words, he will not directly benefit from the remedies which aim at protecting the corporation.
Any Dispute Within Your Corporation? JuriGo Can Help You Find a Solution!
Therefore, if you are involved in a corporation, as a shareholder or as an administrator, you will probably encounter many disagreements with the other parties. You all want to increase your own personal valuation and sometimes, these do not align with the interest of the corporation itself.
Before calling a lawyer, it is important to try to resolve the issue amicably. Indeed, almost all those disagreements are quickly resolved, and, in that case, the lawyer could only make things turn for the worse.
However, if this does not help you resolve the situation quickly, the next step will be to find a good corporate litigator. Such lawyers will quickly be able to understand the rules adopted within your company and make sure they are correctly applied.
Being home to Canada’s stock market, Toronto has many corporations and thus, many corporate lawyers. That being said, not all professionals are a good fit for your personal situation. Having the wrong lawyer can cause a lot more damage than you think.
With JuriGo, finding the right lawyer has never been easier. With its vast network of lawyers, it will help you find the best one for you for free!