What is a plan of arrangement and when would an Ontario corporation use one?

A plan of arrangement is a court-supervised procedure under the Business Corporations Act (Ontario) that lets a corporation carry out a complex reorganization in one integrated step, with a Superior Court order making the whole package binding on everyone involved. Ontario corporations turn to an arrangement when what they want to do — reshuffling share classes, merging with an unrelated company, splitting a business in two, buying out minority shareholders, or combining several of these at once — can't practically be accomplished through an ordinary shareholder vote, amalgamation, or straightforward asset sale alone.

The defining feature is court supervision: the corporation applies to the Superior Court, which must be satisfied the arrangement is put forward in good faith and is fair and reasonable — unlike the federal CBCA, the OBCA does not require proof that the result couldn't practicably be achieved another way (s. 182). Once that's shown, the court can approve terms affecting share exchanges, debt restructuring, and asset transfers together, and its order binds shareholders, including some who voted against it, subject to dissent rights. Because the process folds court approval, shareholder approval, and multiple transactional steps into one court-sanctioned package, it's most often seen in going-private transactions, corporate splits, and larger reorganizations rather than routine changes. Talk to a business lawyer early if your reorganization doesn't fit neatly into ordinary amalgamation or sale mechanics.