What's the difference between an oppression remedy and a derivative action under the CBCA?

Derivative action: someone else's claim, brought with the court's permission

CBCA s.239(1) lets a complainant “apply to a court for leave to bring an action in the name and on behalf of a corporation or any of its subsidiaries… for the purpose of prosecuting, defending or discontinuing the action on behalf of the body corporate.” CBCA s.239(1) Leave is not automatic: s.239(2) requires notice to the directors, good faith and that the action serves the corporation's interest. Because the cause of action belongs to the corporation, s.240 lets the court direct that recovery “shall be paid, in whole or in part, directly to former and present security holders” instead CBCA s.240(c) — but the default recipient is the corporation, not the complainant.

Oppression: your own claim, for your own relief

CBCA s.241(1) lets “a complainant” apply directly “for an order under this section,” grounded under s.241(2) where conduct “is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer” CBCA s.241(2) — no leave and no notice-to-directors step, because the complainant asserts harm to themselves. The remedy is correspondingly personal: a buy-out order, a variation of a transaction, or another order that runs to the complainant.

Where it changes: the OBCA numbering is not what you'd guess

An Ontario company's near-identical provision is easy to mis-cite. OBCA s.246, “Derivative actions,” tracks CBCA s.239: “a complainant may apply to the court for leave to bring an action in the name and on behalf of a corporation…” OBCA s.246(1) s.247, “Court order,” is the powers provision matching CBCA s.240 — not the oppression remedy. Ontario's oppression remedy is s.248, a separate section again. Citing s.247 as “the OBCA oppression remedy” is a common, wrong shortcut.

Where This Plays Out in the Case Files

• • A derivative action brought by the sibling outside the business — a brother who did not work in the company sued in ITS name over management fees paid to his sister's holding company — a derivative claim, not an oppression claim.
• • The holdout cousin the majority could not simply vote out — s.241 oppression noted as the door a private CBCA squeeze-out is subject to (s.190(1) is itself subject to s.241).

Sources

• • Canada Business Corporations Act, R.S.C. 1985, c. C-44 — s.239 (leave to commence a derivative action), s.240 (the court's powers, incl. redirecting recovery), s.241 (the oppression remedy and its grounds).
• • Business Corporations Act (Ontario), R.S.O. 1990, c. B.16 — s.246 (“Derivative actions”, near-identical wording to CBCA s.239), s.247 (“Court order”, the powers provision — not the oppression remedy), s.248 (Ontario's oppression remedy).
• • Treadstone Law — the derivative action available to an Ontario shareholder — directly on point background on the standing test and remedy.