Case information

Commercial law – Corporations – Legislation – Interpretation – Applicants were part of a group of shareholders dissenting from a proposed transaction by the respondent for sale of a significant company asset – How should the fair value of their shares be assessed – How should Canadian courts treat value that is realizable or receivable after the valuation date – Should any component of value attributable to the transaction giving rise to the right of dissent be excluded – Should the respondent be valued on a distressed basis.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

The applicants are three of a larger group of dissenting shareholders who exercised their right of dissent under s. 191 of the Business Corporations Act, RSA 2000, c B-9 (the “Act”) in respect of a transaction entered into by the respondent company. Pursuant to subsection 191(3) of the Act, a dissenting shareholder is entitled to be paid by the corporation the fair value of the dissenter’s shares. Fair value is determined “as of the close of business on the last business day before the day on which the resolution from which the shareholder dissents was adopted”. The dissenting shareholders applied to court to fix the fair value of their shares. An issue arose about whether and to what extent they were entitled to benefit from the transaction from which they had dissented. A second issue was whether the respondent should be valued on a distressed basis, given its financial circumstances on the valuation date. The Court of Queen’s Bench of Alberta determined that: i) as at the valuation date, the respondent was no longer in financial distress; ii) negotiated transaction prices are an appropriate approach to valuing a property and are not an impermissible use of the hindsight rule; and iii) the fair value cannot include the part of the transaction payable by a future contribution, the value of which only arose from the execution of the business plan, no part of which was implemented or operational on the valuation date. The Court of Appeal of Alberta dismissed an appeal and cross-appeal.