Anonymised, illustrative composite. A 14% rollover holder threatened to stop an asset sale outright — and the deal team spent a week discovering that Canadian corporate law does not actually give a dissenting shareholder that power.
At a glance
A fund's platform company, incorporated under the CBCA, agreed to sell substantially all of its operating assets to a strategic buyer for $52M. The company's cap table included a 14% holder — a former operating partner who had rolled part of his sale proceeds from an earlier bolt-on into a class of preferred shares that carried no ordinary voting rights. The deal team, reading the shareholders' agreement, initially assumed his consent was not required to approve the transaction.
The holder disagreed with the valuation, believed the assets were worth materially more, and told the sponsor's deal partner he would “block the sale.” The statement was taken at face value for several days, long enough to consider restructuring the deal around him, before the sponsor's counsel confirmed what CBCA s.189(3) actually requires: “A sale, lease or exchange of all or substantially all the property of a corporation other than in the ordinary course of business of the corporation requires the approval of the shareholders” and under s.189(6), “each share…carries the right to vote in respect of a sale, lease or exchange…whether or not it otherwise carries the right to vote.” His preferred shares, silent in every other context, woke up specifically for this resolution.
A two-thirds special resolution was required to approve the sale. The 14% holder, even voting his full block against it, could not defeat it on his own. A special resolution is two-thirds of the votes cast — not two-thirds of all shares outstanding (CBCA s.2(1)) — so a 14% block only bites where turnout is thin enough that 14% exceeds one third of the votes actually cast. With the fund voting its own majority, it never was, and no other shareholder was aligned with him. His actual leverage was not a veto; it was the dissent procedure. Once notice of the resolution issued, he had until the meeting to file written objection under s.190(5), the corporation then had ten days after the resolution passed to notify him under s.190(6), he had twenty days from that notice to send a formal demand for payment under s.190(7), and the corporation was required to make a fair-value offer within seven days of the later of the transaction closing and receiving his demand, under s.190(12) — four sequential clocks the deal team had to build directly into the closing calendar.
The rule that actually governed the outcome is the one the sponsor's counsel had to explain twice: dissent is an exit right, not a veto. As one plain-language summary of the remedy puts it, the dissent and appraisal remedy “does not let a dissenting shareholder block the sale” — it lets that shareholder exit at fair value instead of remaining a minority holder of whatever the corporation becomes afterward. Under s.190(3), that fair value is assessed “as of the close of business on the day before the resolution was adopted” — an independent valuation date, not the deal price. Under s.190(4), the holder could not dissent as to part of his shares and accept the deal as to the rest: it was all or nothing. The company's shareholders' agreement had nothing to say on the point; and it could not have. Dissent is a statutory right, and s.190(1) is expressed as subject only to sections 191 and 241 of the Act — not to any private agreement — so a shareholders’ agreement, unanimous or otherwise, cannot contract it away. A USA that displaces the directors’ powers moves director rights, duties and liabilities onto the shareholders under s.146(5); it does not reach s.190 at all.
With the timeline mapped, the deal team closed on the original date and triggered the s.190(12) offer clock the same day. The corporation's independent valuator produced a fair-value estimate roughly 6% above the deal's implied per-share price for that class, reflecting the preferred shares' liquidation preference stacking ahead of common in the actual transaction structure, and the company made a written offer within the seven-day window “showing how the fair value was determined,” as s.190(12) requires. The holder accepted inside the thirty-day acceptance window rather than pushing to court, and was paid out within the following ten days under s.190(14). The sale itself was never at risk once the two-thirds threshold was confirmed reachable; the only real project was managing four statutory deadlines without missing one. For a shareholder dispute that genuinely can stall a transaction rather than just complicate its calendar, see how an oppression claim did exactly that mid-process.
The signal to catch early is any class of shares described internally as “non-voting” being treated as irrelevant to a sale-of-assets vote. Under CBCA s.189(6), that description is only true until the specific resolution in question is a sale, lease or exchange of substantially all the property — at which point every share votes, preferred or common, voting or not. Cap-table diligence that stops at “who has voting shares” misses exactly the holder who ends up mattering most on an asset deal.
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