When can a court order a corporation wound up on the just and equitable ground in Ontario?
Ontario law allows a court to order a solvent corporation wound up on the "just and equitable" ground in situations where continuing the corporation has become genuinely untenable - most commonly, a complete and irreparable breakdown in the relationship between the shareholders of a small, closely held corporation, especially where the business was really run more like a partnership based on mutual trust that has now broken down entirely, or where the very purpose the corporation was formed for has failed or become impossible to carry out.
This is generally treated as a remedy of last resort, since it ends the corporation entirely rather than fixing the relationship or compensating a wronged party, and courts prefer a less drastic remedy - like an oppression-based buyout - if one would adequately address the problem. Winding up tends to be reserved for situations where the parties are genuinely deadlocked with no reasonable path forward, or the corporation's foundational purpose no longer exists, rather than simply because shareholders are unhappy with each other or disagree about business decisions.
Key takeaways
- Just and equitable winding up is available where the shareholder relationship has broken down irreparably or the corporation's purpose has failed.
- It's treated as a remedy of last resort, used when less drastic options wouldn't adequately fix the problem.
- Courts often prefer an oppression-based buyout over winding up if that would resolve the dispute.
- Ordinary disagreement or unhappiness between shareholders generally isn't enough on its own to justify winding up.