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Cassels Brock Client Reinstated as Director and Vice President of a Private Company Through Arbitration Process

Published: 06/21/2011

By Robert B. Cohen

On June 17, 2011, a client of Cassels Brock obtained declaratory and other relief by way of an arbitration process prescribed by a unanimous Shareholders Agreement.  More specifically, an arbitrator has declared and ordered that:

1. the client was wrongfully terminated as an employee and is entitled to significant termination pay set out in the Shareholders Agreement;

2. the client is and ab initio was an officer (Vice President) and director of the company in question;

3. certain call rights set out in the Shareholders Agreement and used by the company to try and appropriate the shares of the client were improperly implemented (as were unilateral resolutions and share transfers) such that the client retained the shares in question, along with her status as director and Vice President of the company.

The case is of particular significance as it demonstrates the strict enforceability of unanimous shareholders agreements as they pertain to titles and positions afforded to shareholders in a company.  Furthermore, the case highlights the importance of properly drafting and implementing contractual rights to retrieve a shareholder’s shares as the failure to strictly comply with such rights will enable shareholders to retain their shares and corresponding rights in a company. 

The client of Cassels Brock was represented by Robert B. Cohen of the Advocacy Department.