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CCCA_V6No1_Dept-RiskMgmt-FIN_CCCA_V5No3_Dept-Performance-V1.qxd 2/13/12 9:11 PM Page 18 Risk Management Manage stakeholder expectations to prevent oppression claims By Stephen Antle n oppression claim can be one of interests, all in the capacity (shareholder, with its public statements. Publicly traded Acorporate counsel’s worst night- creditor, etc.) which entitled them to make companies publish documents such as mares. The range of potential claimants the claim. financial statements, management discussion is very broad: security holders, directors, The most important thing corporate and analysis and information circulars.They officers, even creditors. The test for lia- counsel can do to manage the risk of issue press releases. Nowadays most compa- bility is so fact-specific as to be unpre- oppression claims is to manage the expec- nies, public or not, have websites, containing dictable. The court has the discretion to tations of the corporate stakeholders who all kinds of statements about themselves. It’s grant literally any remedy it deems might make them. Remember that to not uncommon for companies to have appropriate, including the forced pur- found an oppression claim those expecta- codes of corporate conduct posted on their chase of a minority shareholder's shares, tions must be, not just subjectively held, but websites. All of these contain statements remedies against directors and officers also objectively reasonable. The objective about how the company will be managed, personally, and even corporate liquida- aspect of this prong of the test gives coun- which can give rise to objectively reason- tion. It’s not for nothing that the sel scope to manage those expectations. able expectations. Corporate counsel can Supreme Court of Canada referred to For example, the courts have held that it manage the risk of oppression claims by the oppression remedy as the Charter of is generally objectively reasonable for a cor- managing the content of those statements Rights and Freedoms of corporate law. porate stakeholder to expect their company from the perspective of what expectations And if that wasn’t bad enough, oppres- to comply with its legal obligations. In most they might create, and then ensuring the sion claims can be certified as class pro- cases it is likely reasonable for a stakeholder company complies with those statements. ceedings in most Canadian jurisdictions. to expect their company to comply with its As with public statements, so with private However, there are practical steps cor- incorporating statute, articles, shareholders’ communications. Private statements by the porate counsel can take to manage the agreement and any other applicable agree- company to stakeholders can easily give rise risk of oppression claims, and hopefully ments. So, corporate counsel should know to objectively reasonable expectations about prevent them arising altogether. the requirements of those documents and how it will be managed. Corporate counsel Doing so depends on a clear understand- ensure the company makes the required needs to educate company representatives ing of the test for when oppression has corporate filings, holds annual general meet- about this and manage the content of those taken place. The Supreme Court of Canada ings and provides its shareholders with communications, ensuring they are clear, has made it clear that the test is two- financial statements as required, and fulfills and clearly recorded. One very practical pronged. First, an oppression claimant must its obligations under applicable agreements. benefit of living in the email age is the sim- establish that they subjectively held objec- All motherhood and apple pie of course, but plicity of confirming a telephone call or tively reasonable expectations about how they also manage the risk of oppression meeting with a short email. That sort of the company would be managed, and that claims by limiting a stakeholder’s ability to clear, contemporaneous documentation of those expectations were not met. Second, establish that their reasonable expectations communications will go a long way towards they must establish that the failure to about the company’s management have not managing reasonable expectations. meet their expectations was, depending on been met. One situation where corporate counsel the statute under which the company Similarly, the courts have generally can manage communications in this way is was incorporated, oppressive or unfairly held that a corporate stakeholder can prospective investors’ due diligence. It is ISTOCKPHOTO prejudicial, or an unfair disregard of their reasonably expect their company to comply common for the company to make available 18 CCCA Canadian Corporate Counsel Association SPRING 2012