4.4.4.2.1 In a normal context

S. 994 requires that claims be based on the company's affairs rather than on the personal rights or capacities of other fellow shareholders. In Re a company, shareholder R chose to pay off the company's Joan owed to the bank, and transferred the bank security to himself.1 The plaintiff asserted that this constituted unfairly prejudicial conduct and petitioned for relief under s. 459 (s. 994).2 The court held that the allegation in relation to the paying off was an action arising from the defendant's personal capacity without prejudicing any conduct of company's affairs and could not constitute a ground for relief under s. 459 (s. 994).3 Likewise, the expectation that a shareholder will not sell his shares without the consent of other shareholders is not a matter in relation to the conduct of the company and does not fall within the scope of s. 994.4 In the case of Leeds, the defendant was suited for breaching pre-emption rights onder private contractual agreements in his responds to a take-over bid. The court judged that such an act was outside the course of the "affairs of the company".5

In the situation of parent and subsidiary companies, the issue of the "affairs of the company" is not as straightforward as on the occasions listed above. Normally, owing to their separate legal personalities, the parent company and its subsidiary are two legal persons, and decisions taken by the board of the parent cannot be considered the subsidiary's affairs and vice versa. In special situations, however, such a norm can be overridden. Decisions and actions in the parent can sometimes be considered affairs of the subsidiary, and vice verse. Two issues are specially relevant to the use of the unfair prejudice remedy. The first is the extent to which the influence of the parent is viewed as the affairs of the subsidiary and vice versa. The second issue is whether an unfairly prejudicial act recognized in a common setting is also considered as unfairly prejudicial in the context of parent and subsidiary companies.