Can majority shareholders force out a holdout shareholder without going to court?

The CBCA route: a squeeze-out by ordinary vote

CBCA s.2(1) defines a squeeze-out transaction as “a transaction by a corporation that is not a distributing corporation that would… result in the interest of a holder of shares of a class of the corporation being terminated without the consent of the holder, and without substituting an interest of equivalent value in shares… which shares have equal or greater rights and privileges than the shares of the affected class.” CBCA s.2(1) It is carried out under the same authority as a going-private transaction: s.193 says simply that “a corporation may carry out a going-private transaction.” CBCA s.193 No court order is built into that route — the special resolution does the work. If a resolution is genuinely impracticable, the fallback is a court-approved arrangement under s.192, whose own definition of “arrangement” expressly includes “a going-private transaction or a squeeze-out transaction.”

One route does NOT apply here, even at very high acceptance: CBCA s.206 lets an offeror “acquire the shares held by the dissenting offerees” once a bid is “accepted by the holders of not less than ninety per cent of the shares of any class… other than shares held… by or on behalf of the offeror.” CBCA s.206(2) That power is confined to a “distributing corporation” that has offered securities to the public — a private company with no prospectus was never inside it, whatever the acceptance level. The holdout's own remedy on a squeeze-out is dissent under s.190(1)(f).

Where it changes: Ontario has no out-of-court version

The OBCA does not give a majority the CBCA's simple special-resolution squeeze-out. Its going-private transaction sits in Part XV OBCA s.187(1) and carries its own valuation and disclosure machinery. Short of that, the general-purpose route is an arrangement under s.182, and s.182(3) is explicit that even after shareholder approval “the corporation may apply to the court for an order approving the arrangement” OBCA s.182(3) — a court application is built into the section, not an emergency fallback. Whether a holdout can be forced out without a judge depends on which Act incorporated the company.

Where This Plays Out in the Case Files

• • The holdout cousin the majority could not simply vote out — why a 92%-accepted family sale under the CBCA needed s.193, not the s.206 route the family first reached for.
• • No out-of-court squeeze-out under the OBCA — the identical 92%-and-one-holdout deal, run through an Ontario company instead — and sent to a judge.

Sources

• • Canada Business Corporations Act, R.S.C. 1985, c. C-44 — s.2(1) (definitions of “squeeze-out transaction” and “going-private transaction”), s.193 (authority to carry out a going-private transaction), s.206 (compulsory acquisition after a 90%-accepted take-over bid, cited to show what does not apply), s.192 (court-approved arrangement fallback).
• • Business Corporations Act (Ontario), R.S.O. 1990, c. B.16 — s.182 (arrangement, incl. s.182(3) adoption sequence), s.187(1) (Part XV scope), s.190 (going-private transaction).
• • Treadstone Law — differences between CBCA and OBCA shareholder rights — general background on the two statutes.