Can a minority shareholder's shares be diluted specifically to force them out before a sale?

A corporation can generally issue new shares, and doing so can dilute existing shareholders' proportional ownership, but where dilution is used specifically as a tactic to reduce a minority shareholder's influence or economic interest ahead of a sale, rather than for a legitimate business purpose like raising needed capital, that conduct can squarely support a claim under Ontario's oppression remedy in the Business Corporations Act.

Courts look closely at the purpose and effect of a share issuance in these situations — a dilution that happens to coincide with a sale isn't automatically improper, but one clearly timed and structured to squeeze out or disadvantage a minority shareholder before a transaction is exactly the kind of unfair conduct the oppression remedy exists to address. A minority shareholder who suspects this is happening should get legal advice as soon as possible, since remedies for oppression are more effective, and evidence easier to gather, closer to when the conduct actually occurred rather than well after a sale has already closed.