Ontario Civil

Business Associations

Specific matters of corporate organization


Size of plaintiff’s shareholdings was relevant factor on motion for leave to bring derivative action

Plaintiff owned less than .015 per cent of shares of defendant publicly-traded corporation. Plaintiff’s motion for leave to bring derivative action in name of corporation pursuant to s. 246 of Business Corporations Act was dismissed. Plaintiff appealed. Appeal dismissed. Motion judge found that derivative action did not appear to be in interests of corporation, and motion judge did not err in his overall focus on maximization of value of corporation. Motion judge used language of s. 246, referring to “interests of corporation”, and expressed opinion there was no significant difference in language of s. 246 and language of “best interests” in federal legislation; there was no error. Motion judge considered benefit of shareholder oversight, and other appropriate and relevant factors. Motion judge did not improperly consider size of plaintiff’s shareholdings, absence of participation by other shareholders and existence of alternative personal action; these were all relevant factors. Decision was discretionary, there was no error of law or principle, there was no palpable and overriding error of fact, and deference was owed.

Melnyk v. Acerus Pharmaceuticals Corporation (2018), 2018 CarswellOnt 3115, 2018 ONSC 1353, Swinton J., Linhares de Sousa J., and Kurke J. (Ont. Div. Ct.); affirmed (2017), 2017 CarswellOnt 2622, 2017 ONSC 1285, H.J. Wilton-Siegel J. (Ont. S.C.J.).

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