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Funny, You Don't Look Oppressed: What Rights Do You Have As A Shareholder?

Edmundo and Valerie Duarte appeared to have it all...cooking skills, equipment and a lucrative exclusive contract to provide kosher food services to the Beth Emeth Bais Yehuda Synagogue.

Well, maybe not all.

The Duarte's were not Jewish and in order to supply food to the Synagogue they needed a Jewish person to provide religious supervision over the preparation of the food.

Enter Ofer Penner, and guess his religion. (If you guessed Episcopalian, say three Hail Mary's and refuse Manischewitz wine at dinner- Ofer Penner was very much Jewish.)

The Duarte's and the Jewish Mr. Penner formed a company in which Ofer Penner got 25% of the shares of the food catering company (Uptown Gourmet Catering Ltd.) and the Duarte's held the remaining 75%. The officers and directors of the company were the Duarte's. Ofer Penner was neither a director nor an officer, and there was no shareholders agreement.

Business arrangements and marriages have a few things in common... often they start off well but may end badly. This was one of those endings.

Not two years later, after they started working together, Edmundo Duarte terminated Ofer Penner's employment for cause, on the basis that Ofer was counterproductive, disruptive, abrasive and confrontational and refused to take direction or to work regular hours. For his part, Ofer disagreed that there was cause to fire him.

To add insult to injury, although he was a 25% shareholder in the company, Ofer was also excluded from running the business.

So there you have it. Ofer Penner has 25% of the business, but no job and since he was neither an officer nor a director of the company, no power to do anything about it! In Yiddish, the word "bupkis" means, "goat droppings" or "nothing". Did Ofer Penner end up with bupkis?

The Ontario Business Corporations Act provides for a situation just like this one; it is the oppression remedy of that Act and is included to help out minority shareholders who have little or no power in a corporation.

The Judge who heard the case in 2011 found that Ofer Penner had indeed been an oppressed shareholder. The Judge valued the company at $459,000.00. That is a lot of kreplach (yiddish word for dumplings), and awarded Ofer Penner $115,000.00 for his interest in the business.

Lessons to be learned?

1) Good business law lawyers can find solutions to company problems that end up in court.

2) A good shareholders agreement can avoid a lot of court time and money.

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