Minority Shareholder Appraisal Rights in Ontario

Know Your Exit Rights: A Minority Shareholder’s Guide to Appraisal in Ontario (2025 Update)

When major corporate transactions occur—such as mergers, asset sales, reorganizations, or going-private deals—minority shareholders in Ontario may have the legal right to formally oppose the transaction and demand to be bought out at fair market value. These rights, known as appraisal rights (or dissent rights), empower shareholders who disagree with a fundamental corporate decision to exit the company rather than being forced to accept the new corporate structure.

This guide explains what triggers appraisal rights, who can exercise them, and the step-by-step process in Ontario for 2025, along with the advantages, limitations, and practical considerations every minority shareholder should know.

What Triggers Appraisal Rights?

Under the Canada Business Corporations Act (CBCA) and the Business Corporations Act (Ontario) (OBCA), appraisal rights only apply in specific, legislated situations. Common triggers include:

Amendments to the articles that affect share structure or restrictions
Amalgamations or mergers
Continuance (moving the corporation to another jurisdiction)
Sale of all or substantially all corporate assets
Going-private transactions or squeeze-outs

In Ontario, the governing provision is Section 185 of the OBCA.

Once dissent rights are properly exercised, the shareholder may initiate a legal process compelling the corporation to pay the fair market value of their shares—essentially a structured exit from the business.

Who Can Exercise Dissent Rights?

Registered Shareholders

Any registered shareholder—regardless of class or series—may dissent if they object to an applicable fundamental change.

Beneficial Shareholders

Beneficial owners (those holding shares through brokers or nominees) must convert their beneficial ownership into registered ownership before they can exercise dissent rights.

Payment for Shares

If the shareholder accepts the corporation’s offer or if a court determines the fair value:

The corporation must pay the determined amount within 10 days, unless the court orders otherwise.
Once payment is made, the shareholder ceases to have any shareholder rights, except the right to receive their payout.

Exceptions and Limitations

Appraisal rights may not apply in certain circumstances:

1. Identical Replacement Shares

If shareholders receive new shares identical in all material respects to their previous shares (common in certain amalgamations), dissent rights may not apply.

2. Insolvent Corporations

If paying dissenting shareholders would render a corporation insolvent, the court may limit or deny the remedy.

3. Public Corporations

Public companies may be exempt in cases where shareholders receive equivalent securities or where takeover bid rules govern.

Procedural Roadmap in Ontario (2025)

Appraisal rights involve strict, time-sensitive steps. Missing any deadline can void the right entirely.

1. Notice of Meeting & Notice of Dissent

Shareholders must receive formal notice of the meeting. Before or during the meeting, the shareholder must send a written Notice of Dissent to preserve their rights.

2. Confirmation of Adoption

If the resolution passes, the corporation must send a Confirmation Notice, outlining next steps and the appraisal procedure.

3. Demand for Payment

After receiving the Confirmation Notice, the dissenting shareholder must submit a Demand for Payment within the prescribed timeframe.

4. Corporation’s Offer to Pay

The corporation then has seven days after either the Demand for Payment or the adoption of the resolution to issue an Offer to Pay, including its valuation rationale.

5. Acceptance or Court Application

If the shareholder accepts the offer, payment must be made within 10 days.
If not, the shareholder may commence court proceedings to have the fair value determined.

Advantages for Minority Shareholders

Provides a structured way to exit a transaction that does not align with a minority shareholder’s interests
Ensures shareholders can receive fair value, potentially including a premium
Protects against oppressive or unfair conduct by majority shareholders

Limitations to Consider

Procedural requirements are strict; errors can invalidate the right
Shareholders may be responsible for legal costs if their claim is unsuccessful
Rights may be restricted by shareholder agreements, depending on the terms

Practical Recommendations for Shareholders

Verify statutory deadlines and ensure all notices follow exact legislative requirements.
Consider valuation timing strategically, especially in phased or multi-step transactions.
Prepare for potential litigation costs if valuation ends up before the court.
In related-party transactions, obtain an independent valuation that complies with regulatory standards.
Consult legal counsel early—missteps can lead to the complete loss of rights.

Final Thoughts

Appraisal rights in Ontario offer a powerful but technical avenue for minority shareholders seeking to exit major corporate changes while obtaining fair value for their shares. However, the process is complex, deadline-driven, and often contentious. Professional legal advice is essential to protect your rights and maximise your outcome.

Need Legal Support With Appraisal or Dissent Rights?

If you are considering dissenting from a merger, reorganization, or asset sale, the corporate lawyers at Kalfa Law Firm can guide you through every step of the appraisal process.
We help shareholders understand their rights, meet strict statutory deadlines, and secure fair value for their shares.

Frequently Asked Questions:

What are appraisal rights in Ontario?

Appraisal rights (or dissent rights) allow minority shareholders to oppose certain corporate transactions and demand fair market value for their shares instead of accepting the resulting changes.

Which transactions trigger appraisal rights?

Common triggers include mergers, continuances, asset sales, and amendments to share structure, as outlined under the OBCA and CBCA.

How do I exercise my dissent rights?

You must deliver a Notice of Dissent before or at the shareholders’ meeting and then follow the statutory timeline, including submitting a Demand for Payment after receiving the Confirmation Notice.

Can beneficial shareholders exercise dissent rights?

Not directly. They must first have their shares registered in their own name.

What happens after I dissent from a transaction?

The corporation makes an Offer to Pay. If you disagree with the valuation, you may apply to court to determine fair value.

Do appraisal rights apply to public companies?

Only in limited cases. Appraisal rights may be restricted where shareholders receive equivalent securities.

Should I consult a lawyer before exercising appraisal rights?

Yes. The process involves strict deadlines and legal consequences. A corporate lawyer can help you preserve your rights and avoid costly errors.

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Zuzanna Kuza, B.A., J.D., Associate Lawyer

Zuzanna Kuza is an associate lawyer at Kalfa Law Firm. Zuzanna’s practice is focused in corporate-commercial and private M&A law including corporate reorganizations, corporate restructuring, mergers and acquisitions, commercial financing, secured lending and transactional law.

The above provides information of a general nature only. This does not constitute legal or accounting advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.

[1] In Husack v. Husack, 2024 ONCA 117, the Ontario Court of Appeal held that a minority shareholder could not exercise statutory dissent rights in connection with a sale of substantially all assets, due to a general waiver of statutory rights under the OBCA in the shareholders agreement.