- The appraisal remedy does not let a dissenting shareholder block the sale.
- The dissent and appraisal remedy is generally available to a shareholder of a corporation that is proposing certain fundamental changes — including a sale of all or substantially all of…
- The exact procedural steps and timing requirements are set out in the OBCA and need to be followed precisely, but the general shape is: 1.
A special resolution to sell "all or substantially all" of an Ontario corporation's assets only needs a supermajority of shareholder votes to pass — not unanimous consent. So what happens to the shareholders who voted against it, or who simply weren't willing to become shareholders of a corporation that no longer holds its core business? Ontario law gives them a specific tool: the dissent and appraisal remedy.
This article explains what that remedy is, who can use it, and what it actually accomplishes for a shareholder who disagrees with a sale.
What the Appraisal Remedy Actually Does
The appraisal remedy does not let a dissenting shareholder block the sale. Once the required special resolution passes with the necessary shareholder approval, the transaction can proceed. What the remedy gives a dissenting shareholder instead is the right to exit — to be paid the fair value of their shares in cash, determined independently of the transaction price, rather than remaining a shareholder of the post-sale corporation.
In effect, the law separates two questions:
- Should the sale go ahead? — decided by the required majority of shareholders.
- Should every individual shareholder be forced to stay in as a result? — answered no, for shareholders who formally dissent and follow the required process.
Who Can Use the Remedy
The dissent and appraisal remedy is generally available to a shareholder of a corporation that is proposing certain fundamental changes — including a sale of all or substantially all of its assets outside the ordinary course of business, along with certain other major corporate changes such as amalgamations. It is not a general-purpose tool for any shareholder unhappy with a business decision; it applies specifically to the categories of fundamental change the OBCA identifies as significant enough to warrant it.
The General Shape of the Process
The exact procedural steps and timing requirements are set out in the OBCA and need to be followed precisely, but the general shape is:
- A shareholder who intends to dissent typically must object before or at the meeting where the resolution is voted on, rather than simply voting against it and staying silent about intending to dissent.
- The corporation sends a notice to shareholders confirming the resolution passed, once it has.
- The dissenting shareholder sends a formal written demand for payment of the fair value of their shares, following the statutory process and timelines.
- The corporation makes an offer to pay, or the parties otherwise proceed toward determining fair value — where the corporation and the dissenting shareholder cannot agree, the OBCA provides a mechanism for the court to determine fair value.
- The dissenting shareholder is paid the determined fair value and ceases to be a shareholder, in exchange for their shares.
Because strict notice deadlines and procedural steps apply throughout, a shareholder who wants to preserve dissent rights should get legal advice before the shareholder meeting, not after — missing a procedural step can forfeit the remedy entirely.
"Fair Value" Is Not the Same as "The Deal Price"
A common misunderstanding is that a dissenting shareholder is simply entitled to their pro-rata share of whatever the corporation is being sold for. Fair value is a distinct legal concept, assessed independently — it can end up higher, lower, or the same as what the transaction price might suggest, depending on how the corporation's value is actually assessed. Where the corporation and a dissenting shareholder can't agree on fair value, resolving that disagreement can itself become a court proceeding, adding time and cost for both sides.
Comparing Options for an Unhappy Shareholder
| Option | What It Achieves | What It Doesn't Achieve |
|---|---|---|
| Vote against the resolution | Registers formal opposition | Does not block the sale if the required majority still approves it |
| Dissent and demand fair value | Exit at an independently determined fair value, in cash | Does not stop the sale from proceeding for everyone else |
| Do nothing | Remain a shareholder of the corporation after the sale, on whatever terms result | No separate payout; simply continues holding shares |
| Challenge the process itself (e.g., approval was defective) | Potentially different remedies, depending on what went wrong | A distinct legal question from dissent — not the same remedy |
Why This Matters for Both Sides of a Deal
For a buyer: the possibility of dissenting shareholders is a due diligence and closing-risk issue. A material number of dissents, or a fair-value dispute that drags on, can affect the seller corporation's cash position and timeline even after the underlying sale has otherwise closed.
For a majority shareholder or the corporation itself: understanding the dissent process — and following its notice and timing requirements precisely — avoids disputes about whether a shareholder properly preserved their rights, which can itself become a separate source of litigation.
Frequently asked questions
Can a dissenting shareholder later change their mind and just keep their shares?
The OBCA's process contemplates specific points at which a dissent can be withdrawn or a shareholder's rights can lapse if they don't follow through with the required steps — this is a procedural detail worth confirming with a lawyer at the time, rather than assuming flexibility either way.
Does the dissent remedy apply to a share sale of the corporation?
No. Dissent and appraisal rights attach to specific fundamental changes the corporation itself undergoes — such as a sale of all or substantially all of its assets, or an amalgamation — not to a separate transaction where individual shareholders simply choose to sell their own shares to a buyer.
What if the corporation and the dissenting shareholder can't agree on fair value?
The OBCA provides a mechanism for the matter to go before a court for a determination of fair value where the parties can't reach agreement on their own — a process that adds time and legal cost, which is one reason many fair-value disputes settle before reaching that point.
Is dissent available if only a small number of shareholders oppose the deal?
Yes — dissent rights belong to individual shareholders regardless of how few or many others also dissent. The size of the dissenting group doesn't determine whether the remedy is available; it may, in practice, affect how the corporation manages the financial impact of paying out fair value to those who dissent.
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