(i) does the exclusion clause apply in the circumstances? (ii) if yes, was the exclusion clause unconscionable at the time the contract was entered into? (iii) if no, should the exclusion clause be unenforceable on public policy grounds?
The Court ultimately found that the combined effect of sections 3.01 and 9.01 of the USA waived the statutory right of the shareholders to vote upon a proposal to sell all of the assets of the corporation. By extension, these two sections also ousted the dissent right stemming from this right to vote. Rounding out its analysis, the Court found that the waiver was neither unconscionable nor contrary to public policy. The Court’s decision indicates that dissent rights arise from other statutory rights provided to shareholders. The statutory dissent rights are not standalone, but rather stem from a shareholder’s right to vote on certain fundamental corporate decisions. Thus, in Husack a waiver of the right to vote on the decision to sell all of the assets of FHH was equally a waiver of the right to dissent to Although a waiver of statutory rights must be done by way of clear and direct language, the Court in Husack found that the waiver does not need to specifically reference the specific right being waived. Rather, a general waiver of any statutory rights that conflict with the terms of the shareholders’ agreement is sufficient, so long as there is a substantial overlap between the situation that the contractual provision seeks to govern and that for which the statute seeks to provide rights. Additionally, the Court held that dissent rights afforded under section 185 of the OBCA may be waived when the corresponding statutory right providing the shareholders with the right to vote on the applicable issue is waived. In light of the above, shareholders should be cognizant of the following key takeaways: such a decision. KEY TAKEAWAYS (i) Husack appears to allow for a more indirect waiver of dissent rights, both: (i) by way of a general waiver clause that does not reference a specific dissent right; and (ii) by the waiver of the voting right from which the dissent right stems. Nevertheless, majority shareholders that want to ensure minority shareholders have effectively waived their dissent rights should ensure that the waiver is explicit to avoid ambiguity. For example, a shareholders’ agreement with a drag-along right, requiring a minority shareholder to vote to sell all of the assets of a corporation should likewise include an explicit waiver of the shareholders’ dissent rights under section 185 of the OBCA. (ii) Conversely, minority shareholders that do not wish to inadvertently waive their statutory dissent rights should be wary of provisions providing for a general waiver of any statutory rights conflicting with the shareholders’ agreement. Additionally, minority shareholders should be cognizant that the waiver of a right to vote on the issues covered by section 185 may also constitute a waiver of the right to dissent on such an issue. (iii) Finally, majority shareholders should be cognizant that waivers of minority shareholder dissent rights will be ineffective in the face of unconscionability or on public policy grounds.
Waiving Dissent: When Silence Isn’t Golden BY CHARLIE KIM AND MATTHEW MCGUIGAN INTRODUCTION The Business Corporations Act (Ontario) (the “OBCA”) permits parties to shareholders’ agreements to waive their statutory dissent rights. Notably, in order for the waiver to be enforceable it must be made with clear and direct language. In the 2023 case of Husack v Husack (“Husack”), affirmed by the Ontario Court of Appeal in 2024, the Court provided guidance as to what constitutes “clear and direct language” in the context of waiving shareholder dissent rights under the OBCA. “Clear and direct language” may be present even if the shareholders’ agreement does not explicitly make reference to the specific dissent right being waived. OBCA DISSENT RIGHTS Section 185 of the OBCA provides shareholders with the right to dissent to certain corporate actions, including the sale, lease or exchange of all or substantially all of the corporation’s property. A dissenting shareholder has the right to sell its shares to the corporation at fair market value. Husack v Husack FACTUAL BACKGROUND The case of Husack involved a family owned business, Frank Husack Holdings Inc. (“FHH”). The shareholders of FHH consisted of: (i) Frank’s four children, who each held non-voting common shares; and (ii) the Estate of Frank Husack (the “Estate”), which held voting shares. The shareholders of FHH were parties to a unanimous shareholders’ agreement (the “USA”). The USA contained the following two provisions at issue in the case: Section 3.01: Notwithstanding the foregoing, the Estate shall have the right at its option to cause the Corporation to sell all or substantially all the assets owned by it to such person or persons at such time and upon such terms and conditions as the Estate in its sole and exclusive discretion considers advisable. Section 9.01: It is the intent of the parties that such provisions of The Business Corporations Act or any successor legislation granting rights to shareholders, which may be in conflict with the provisions of this Agreement, are hereby waived, and the provisions hereof shall govern their dealings among themselves (to the extent allowed by law). Frank’s widow, Evelyn Hussack, was one of the estate trustees of the Estate. In 2019, Evelyn took steps to begin selling all of the assets of FHH pursuant to section 3.01 of the USA. One of the common shareholders, Donna Husack, wished to enact her dissent rights under section 185 of the OBCA. She applied to the Court, arguing that the USA did not contain a provision expressly opting out of the OBCA dissent regime. Donna argued that although the USA gave the Estate the right to trigger a disposition of all of the assets, it did not clearly and expressly oust the shareholders’ dissent rights in this circumstance. DECISION The Court followed the test set by the Supreme Court of Canada in Tercon Contractors Ltd v British Columbia (Transportation and Highways) (“Tercon”) to assess the enforceability of a waiver provision:
3 ROBINS APPLEBY LLP | LEGAL PULSE SUMMER / FALL 2025
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