Frozen out of your
own company?

By Jonathan Kleiman, Barrister & Solicitor · Published June 2026

Most business partnerships start in optimism and end — when they end badly — in a phone call to someone like me. The story is almost always a version of the same thing: two or three people built something together, the relationship soured, and now one of them is being pushed out. The dividends stopped. The salary was cut. The information dried up. The minority owner is still a shareholder on paper, but in every practical sense they have been frozen out of their own company.

If that is where you are, the good news is that Ontario law does not leave you stranded. The oppression remedy is one of the broadest and most flexible tools in our corporate law, and it exists precisely for the situation where the people in control of a company use that control unfairly against someone who is not. It will not undo every disagreement — business partners are allowed to disagree, and not every harsh decision is "oppression" — but where the conduct crosses the line into unfairness, a court has remarkable power to set things right.

Below I walk through how these disputes unfold, what the oppression remedy is and where it lives in the statute, the central idea of "reasonable expectations," who can bring a claim, what a court can order (including the buyout that resolves most of these fights), how oppression differs from a derivative action, and how a good shareholders' agreement prevents most of this from ever reaching a courtroom. None of this is legal advice for your situation — if a dispute is brewing, get advice early, while you still have options.

How do shareholder disputes actually happen?

Most shareholder disputes arise in closely-held companies and take one of three shapes: a squeeze-out, a frozen-out minority, or a deadlocked 50/50. Shareholder disputes are common in closely-held companies — the small, private corporations with a handful of owners who often also run the business day to day. There are no public markets, no easy way to sell your shares, and no neutral board to appeal to. When the people running the company are the same people you are fighting with, you are trapped. In my experience these disputes tend to fall into three recognizable shapes.

The squeeze-out. A partner who was central to the business finds themselves slowly pushed to the margins. The majority stops declaring dividends but keeps paying themselves through salary and bonuses, so the profits flow to them and not to the minority. Or the minority owner, who was also an employee, is fired — losing both their income and their window into the company. The shares are technically still theirs, but worth nothing in their hands.

The frozen-out minority. Here the minority owner is cut off from the basics: financial statements stop arriving, they are excluded from the decisions they used to be part of, and requests for information are stonewalled. The company may be doing fine — they just cannot see it, cannot influence it, and cannot get anything out of it. It is ownership in name only.

The deadlocked 50/50. Two equal owners who can no longer agree on anything. Neither can outvote the other, so nothing moves. The business suffers while the owners are gridlocked, and there is no internal mechanism to break the tie. A deadlock is its own special kind of trouble, because the harm is mutual and the only real solution is usually to separate the owners somehow.

What is the oppression remedy in Ontario?

The oppression remedy is a statutory right under section 248 of the Ontario Business Corporations Act (with an equivalent under the federal Canada Business Corporations Act) that lets a complainant ask a court to fix corporate conduct that is oppressive, unfairly prejudicial to, or that unfairly disregards their interests. The oppression remedy is a statutory remedy under section 248 of the Ontario Business Corporations Act (OBCA). The equivalent remedy applies to federally incorporated companies under the Canada Business Corporations Act (CBCA), so it does not matter much whether your company was incorporated provincially or federally — the protection is there either way.

What the remedy does is let a person called a "complainant" apply to court where the corporation's affairs, or the powers of its directors, have been exercised in a manner that is oppressive, unfairly prejudicial to, or that unfairly disregards the interests of the complainant. Those three phrases — oppressive, unfairly prejudicial, unfairly disregards — are the statutory triggers, and they overlap. You do not have to fit your situation neatly into one box; the point is the unfairness of the conduct and its effect on you.

What makes the remedy so powerful is its flexibility. It is an equitable remedy, which means the court is not confined to a rigid menu — it looks at the substance of what happened and the fairness of the outcome, not just whether every step was technically permitted by the corporation's documents. Something can be perfectly legal in form and still be oppressive in effect. That is the gap the oppression remedy was built to fill, and it is why I reach for it so often in partnership breakups.

What are "reasonable expectations" in an oppression claim?

Reasonable expectations are what you reasonably expected based on the parties' arrangements and conduct — and every oppression claim turns on whether those expectations were violated in a way that is oppressive, unfairly prejudicial, or unfairly disregards your interests. If you take one concept away from this article, make it this one. Every oppression claim turns on reasonable expectations. The court's central question is: what did the complainant reasonably expect, based on the parties' arrangements and conduct — and were those expectations violated in a way that is oppressive, unfairly prejudicial, or unfairly disregards their interests?

The word doing the work there is reasonable. This is not about whatever you privately wished for. It is about expectations that were reasonable in the circumstances — usually because they were created by promises, by how the business was set up, or by a consistent course of dealing among the owners. If, when you joined, everyone understood you would have a management role and share in the profits, and the company paid dividends like clockwork for years, you have a reasonable expectation of those things. Stripping them away to push you out can be oppression.

Where I see people go wrong is assuming that any decision they dislike is automatically oppressive. It is not. Partners are entitled to make business decisions you disagree with, to take the company in directions you would not, even to make choices that turn out badly. The oppression remedy does not guarantee you a good outcome or a harmonious partnership. It guarantees that your reasonable expectations will not be defeated by conduct that is unfair. The whole case usually lives or dies on identifying what those expectations were and proving they were breached.

Does the conduct have to be in bad faith?

No — the standard is about the unfair effect on you measured against your reasonable expectations, not the majority's state of mind, so conduct can be oppressive even without bad faith. Not necessarily. People assume you must prove the majority acted maliciously, but the standard is about the unfair effect on you, not just their state of mind. Conduct can unfairly disregard your interests even where the others did not set out to harm you — for instance, simply forgetting that a minority owner exists when making decisions can be enough. Bad faith certainly helps a claim, but its absence does not sink one. The focus stays on fairness measured against your reasonable expectations.

Who can bring an oppression claim?

Only a "complainant" can apply — a current or former shareholder, a current or former director or officer, or any other person a court decides is a proper person to make the application. The statute defines that term broadly. A complainant includes:

• A current or former shareholder of the corporation (or an affiliated corporation).
• A current or former director or officer of the corporation (or an affiliate).
• Any other person a court, in its discretion, decides is a proper person to make the application.

That last category matters. It gives a judge discretion to let in someone who does not fit the first two buckets but who, in fairness, ought to be allowed to apply — creditors, for example, have been permitted in the right circumstances. And notice the words former shareholder and former director: if you have already been pushed out and your shares taken from you, the door is not automatically closed just because you no longer hold a current title. That is deliberate — the very people most likely to need this remedy are often the ones who have just been stripped of their position.

What can a court order in an oppression case?

Once a court finds oppression, unfair prejudice, or unfair disregard, it has broad power to fix the situation — from restraining the conduct or ordering a share buyout at a fair value to amending the corporate documents, replacing directors, appointing a receiver, setting aside a transaction, or winding up the company. This is where the oppression remedy really shows its teeth. It can:

• Restrain the conduct complained of — order the offending behaviour to stop.
• Order a share buyout — direct one side to buy the other out at a fair value. This is the most common practical outcome, and I come back to it below.
• Award compensation for losses the complainant suffered.
• Amend the articles, by-laws, or a unanimous shareholders' agreement to correct the structure causing the unfairness.
• Replace directors — remove some and appoint others.
• Appoint a receiver to take control of the corporation's affairs.
• Set aside a transaction that was unfair to the complainant.
• Wind up the corporation entirely — the most drastic option, reserved for serious cases.

The guiding principle is that the court tailors the order to the unfairness it finds. The remedy is not punitive for its own sake; it is corrective. A judge will generally try to do the minimum necessary to set right what went wrong, which is why winding up a company — destroying value for everyone — is a last resort rather than a starting point.

Why is a buyout the most common outcome?

Because almost every shareholder fight comes down to two owners who can no longer work together being stuck in the same business with no market to sell into, and a court-ordered buyout at a fair value lets them separate cleanly. In my experience, the buyout is the order that resolves most of these disputes, and it is easy to see why. Strip away the legal arguments and almost every shareholder fight comes down to one practical problem: two people who can no longer work together are stuck owning the same business, with no public market to sell into. A buyout solves that — the court orders one side to purchase the other's shares at a fair value, the owners separate cleanly, and the business carries on under whoever is left. Most of the litigation, frankly, ends up being a very expensive argument about price — what the shares are actually worth — rather than about whether a separation should happen at all.

What is the difference between oppression and a derivative action?

An oppression claim addresses harm done to you as an individual stakeholder, while a derivative action addresses harm done to the corporation itself and requires the court's permission ("leave") to bring. This is a distinction people get wrong all the time, and getting it wrong can sink a claim, so it is worth being precise. The two remedies protect different victims.

The oppression remedy addresses harm done to you as an individual stakeholder. Your interests — your dividends, your role, your access to information, your shares — were oppressed, unfairly prejudiced, or unfairly disregarded. The harm is personal to you, and you bring the claim in your own name to vindicate your own interests.

A derivative action addresses harm done to the corporation itself. The company was the one wronged — say directors diverted its assets or breached their duties to it — and the lawsuit is brought on the company's behalf to recover the company's loss. Because you are suing in the corporation's name, you first need the court's permission, or "leave," to bring it. That leave requirement is a real gate; you cannot simply start a derivative action the way you can launch an oppression application.

A quick way to keep them straight: if the harm flowed away from you, think oppression; if it flowed away from the company, think derivative action. Some fact patterns engage both at once, and choosing the right vehicle is exactly the kind of judgment call worth getting advice on before you file anything.

Do oppression claims go to Small Claims Court?

No — the oppression remedy is an equitable remedy brought in the Superior Court of Justice, because Small Claims Court cannot order a share buyout, amend a corporation's articles, appoint a receiver, or wind up a company. This is one point that trips people up. It is not a Small Claims Court matter.

Small Claims Court is built for straightforward money disputes up to its monetary limit. It is fast and accessible, and it does excellent work — but it simply does not have the power to order a share buyout, amend a corporation's articles, appoint a receiver, or wind up a company. Those powers belong to the Superior Court. I sometimes meet people who assume that because their shareholder fight is "about money," it belongs in Small Claims. It does not. The moment you are asking a court to reorganize who owns what, or to unwind corporate conduct, you are squarely in Superior Court territory, and starting in the wrong forum wastes time and money. If your dispute genuinely is a simple debt and nothing more, that is a different conversation — but a true oppression claim is a Superior Court application.

Is litigation the only way to resolve a shareholder dispute?

No — most of these disputes settle through negotiation, and many shareholders' agreements require mediation or arbitration first, with a court application held in reserve as leverage rather than fired as the opening shot. And it should rarely be the first move. Most of these disputes settle through negotiation long before a judge is involved, and many shareholders' agreements require mediation or arbitration first. A well-pitched buyout offer, backed by a credible threat of an oppression application, resolves the bulk of cases I see. Superior Court litigation is slow and expensive — a contested oppression case can run a year or more — so the realistic goal is usually a fair, negotiated separation, with the court application held in reserve as leverage rather than fired as the opening shot.

How does a shareholders' agreement help prevent disputes?

A well-drafted shareholders' agreement records the owners' expectations in writing and builds in buy-sell clauses and a dispute-resolution path, which keeps the overwhelming majority of these disputes from ever reaching a courtroom. Here is the part I wish every prospective business partner heard before they shook hands: a well-drafted shareholders' agreement is the tool. The partnerships that blow up into oppression litigation are, almost without exception, the ones that never put a proper agreement in place.

A good agreement does several things at once. It records the owners' expectations in writing — how decisions get made, who has what role, when and how dividends are paid — which removes the very ambiguity that oppression claims feed on. It builds in buy-sell and "shotgun" clauses that give owners a clean, pre-agreed way to exit or to separate when they fall out, so a falling-out does not require a judge to engineer a buyout from scratch. And it sets out a dispute-resolution path — often mediation or arbitration through a mediation and arbitration lawyer — so disagreements get resolved privately and quickly instead of in years of public litigation.

I cover the full anatomy of one in my guide on what to include in a shareholders' agreement, and the same logic runs through good exit planning for your business. The honest truth is that the cost of putting an agreement in place at the start is a tiny fraction of the cost of fighting an oppression claim later. If you have co-owners and no agreement, that is the first thing to fix — ideally while everyone is still on good terms.

What are the most common mistakes in shareholder disputes?

The recurring errors are assuming every harsh decision is oppression, waiting too long to get advice, resorting to self-help, confusing oppression with a derivative action, and operating with no shareholders' agreement. These come up again and again — some made by the minority who has been wronged, some by the majority who thinks they are within their rights.

Assuming every harsh decision is oppression. It is not. Business partners are allowed to make decisions you hate. The remedy targets unfairness measured against your reasonable expectations, not ordinary disagreement. Bringing a weak oppression claim is an expensive way to learn that distinction.

Waiting too long to get advice. People often arrive months or years into a squeeze-out, after the damage is entrenched and positions have hardened. The earlier you get advice while a dispute is merely brewing, the more leverage and options you have — including the chance to resolve it without litigation at all.

Self-help and emotional escalation. Locking the other owner out, secretly diverting funds, deleting records, or trying to "win" through unilateral moves almost always backfires — and can turn you from the wronged party into the one accused of oppression. The corporate records and your own conduct will be scrutinized.

Confusing oppression with a derivative action. As above, suing in your own name for a harm that was really done to the company — or vice versa — can be fatal to the claim. Get the vehicle right.

Operating with no shareholders' agreement. The original sin behind most of these fights. Without one, statutory defaults govern and every expectation is contestable. If you are incorporating with partners, see what happens after you incorporate in Ontario for where the agreement fits into setting the company up properly.

Key takeaways

• The oppression remedy is your main tool. Section 248 of the OBCA (and the equivalent CBCA provision for federal companies) lets a complainant apply to court over conduct that is oppressive, unfairly prejudicial, or that unfairly disregards their interests.
• Reasonable expectations are everything. The case turns on what you reasonably expected from the arrangement and conduct of the parties — not ordinary disagreement, but genuine unfairness measured against those expectations.
• A buyout is the usual outcome. Courts have broad power — from stopping the conduct to winding up the company — but ordering one side to buy the other out at a fair value resolves most disputes.
• It is a Superior Court matter. The oppression remedy is an equitable remedy in the Superior Court of Justice, not Small Claims Court, which cannot order buyouts or reorganize a company.
• A shareholders' agreement prevents most of it. Buy-sell clauses, valuation terms, and a dispute-resolution path keep these fights out of court — put one in place early and get advice the moment a dispute is brewing.

Frequently asked questions

What is the oppression remedy in Ontario?

The oppression remedy is a statutory right under section 248 of the Ontario Business Corporations Act (and the equivalent under the federal Canada Business Corporations Act) that lets a "complainant" — usually a shareholder — apply to court when a corporation's affairs or the directors' powers have been exercised in a way that is oppressive, unfairly prejudicial to, or that unfairly disregards their interests. It is a flexible, equitable remedy aimed at protecting stakeholders from unfair conduct, and a court has broad power to fix the situation. In my experience it is the single most important tool a wronged minority shareholder has.

Who can bring an oppression claim?

A "complainant" who can bring an oppression claim includes a current or former shareholder, a current or former director or officer of the corporation or an affiliate, and any other person a court decides is a proper person to make the application. That last category gives a judge discretion — creditors, for example, have sometimes been allowed to apply in the right circumstances. The point is that the remedy is not limited strictly to present shareholders. If you have been pushed out and your shares were taken from you, being a former shareholder does not automatically shut the door.

What counts as "oppressive" conduct?

The statute uses three overlapping standards: conduct that is oppressive, unfairly prejudicial, or that unfairly disregards your interests. In practice that captures things like cutting a minority off from dividends while the majority pays itself, firing a shareholder-employee and stripping their role, diverting corporate opportunities or assets, denying access to financial information, or diluting someone's shares to push them out. Bad faith is not required in every case — the focus is on the unfair effect on you, measured against what you reasonably expected, not just the technical legality of what was done.

What are "reasonable expectations"?

Reasonable expectations are the heart of an oppression claim. The court asks what you reasonably expected based on how the business was set up and how the parties actually dealt with each other — promises made when you joined, a long-standing practice of paying dividends, an understanding that you would have a management role or a seat at the table. It is not about what you privately hoped for; it is about expectations that were reasonable in the circumstances and shared or understood by the others. If those expectations were violated in a way that is oppressive, unfairly prejudicial, or unfairly disregards you, the remedy is available.

What can a court order in an oppression case?

The remedies are deliberately broad. A court can restrain the conduct complained of, order a share buyout at a fair value, award compensation, amend the articles, by-laws, or a unanimous shareholders' agreement, replace directors, appoint a receiver, set aside a transaction, or — in serious cases — wind up the corporation. The court tailors the order to the unfairness it finds. In my experience a buyout is the most common outcome, because most of these disputes come down to one question: how do the warring owners separate cleanly, and at what price?

Can I force the other shareholders to buy me out?

Sometimes, but not automatically. There is no free-standing statutory right that simply lets a minority demand a buyout on request. What you can do is bring an oppression application and ask the court to order a buyout as the remedy for oppressive, unfairly prejudicial, or unfairly disregarding conduct. If the court agrees you were treated unfairly, ordering one side to purchase the other's shares at a fair value is one of the most common ways it resolves the deadlock. A well-drafted shareholders' agreement can also build in a buy-sell mechanism that gives you an exit without ever going to court.

What is the difference between oppression and a derivative action?

They protect different victims. An oppression claim addresses harm done to you as an individual stakeholder — your interests were oppressed, unfairly prejudiced, or unfairly disregarded. A derivative action addresses harm done to the corporation itself, brought on the company's behalf, and it requires the court's permission (leave) before you can start it. So if directors looted the company, the loss is the corporation's and a derivative action fits; if the majority froze you out of your dividends and your role, that harm is personal to you and oppression fits. Some situations engage both, which is a judgment call worth getting advice on early.

Do oppression claims go to Small Claims Court?

No. The oppression remedy is an equitable remedy brought in the Superior Court of Justice, not Small Claims Court. Small Claims handles straightforward money disputes up to its monetary limit; it cannot order a share buyout, amend a corporation's articles, appoint a receiver, or wind up a company. Those powers live with the Superior Court. People sometimes assume a shareholder fight over money belongs in Small Claims, but the moment you ask a court to reorganize ownership or unwind corporate conduct, you are in Superior Court territory. Getting the forum right at the start matters.

How does a shareholders' agreement help?

A well-drafted shareholders' agreement prevents most of these disputes from ever reaching a courtroom. It can set out how decisions get made, how shares can be sold, what a fair valuation looks like, and a clean exit mechanism — including buy-sell or "shotgun" clauses and a dispute-resolution path like mediation or arbitration. Because the agreement spells out the parties' expectations in writing, it both reduces the disagreements that fuel oppression claims and gives a court a clear yardstick if one ever arises. In my experience the partnerships that blow up are almost always the ones that never put one in place.

Do I need a lawyer for a shareholder dispute?

For anything beyond the smallest disagreement, yes. Oppression claims are Superior Court applications that turn on reasonable expectations, corporate records, and valuation — this is not do-it-yourself territory. A lawyer can tell you early whether you have a real claim or a losing one, whether oppression or a derivative action fits, what remedy is realistic, and often whether the fight can be resolved through a negotiated buyout instead of litigation. Getting advice while a dispute is brewing, rather than after it has exploded, usually saves money and preserves options. None of this article is legal advice for your specific situation.

Final thoughts

A shareholder dispute is one of the most stressful things a business owner can go through. The company you helped build becomes the thing tearing you apart, and the people you trusted are now on the other side. What I want you to take from this is that you are not powerless. Ontario's oppression remedy exists precisely to protect owners — especially minority owners — from being treated unfairly by those in control, and a court has wide latitude to put things right, most often by ordering a fair buyout that lets you exit with the value you are owed.

But the remedy is a backstop, not a first resort. The cheaper, faster, and far less painful path is to prevent the dispute in the first place with a proper corporate structure and a real shareholders' agreement — and, when a conflict does arise, to get advice early, before positions harden and legal costs balloon. If the fight is already underway, a commercial litigation lawyer or a shareholder dispute lawyer can assess whether you have a real claim and what a realistic resolution looks like. There is more practical perspective on running a company well in my notes on business advice from a lawyer.

If you are being squeezed out, or you see a dispute coming, call 416-554-1639 or book a free consultation. A short, honest conversation early on can save you an enormous amount of money and grief later — and tell you plainly where you stand.