What happens when shareholders disagree and there is no dispute resolution clause?

Without a dispute resolution clause in a shareholder agreement, a deadlock between shareholders often has no clean internal solution. The parties are left to negotiate informally, seek mediation voluntarily, or resort to litigation — all of which can be expensive, slow, and damaging to the business.

In Ontario, a shareholder can apply to court under the oppression remedy provisions of the Ontario Business Corporations Act if they believe the company or its directors have acted in a way that is unfairly prejudicial to them. Courts take oppression claims seriously, but litigation is rarely fast or inexpensive, and the outcome is uncertain.

A well-drafted shareholder agreement anticipates disputes and provides structured mechanisms to resolve them. Common options include mandatory negotiation periods, then mediation, then binding arbitration. Some agreements also include deadlock provisions that trigger a buy-sell process when shareholders are evenly split and cannot move forward. Having these mechanisms in place before a dispute arises gives both sides a roadmap and reduces the likelihood of costly court proceedings. If your current agreement lacks these provisions, it may be worth reviewing it with a corporate lawyer.