You Were Promised Shares but Never Received Them. What You Can Do About It.
Summary: Under Section 266(3) of the Ontario Business Corporations Act (OBCA), corporate minute books are presumed accurate regarding share ownership. However, as demonstrated in Dhaliwal v. Cheema (2025 ONSC 382), unlisted shareholders can overcome this presumption and prove beneficial ownership by establishing an oral promise to receive shares and a clear course of conduct establishing ownership such as, capital contributions, equal executive management, and signing personal bank guarantees.
It is a common and frustrating reality in closely held Ontario businesses: you form an oral agreement with the founder or partner to receive a specific percentage of shares in a corporation. Relying on that agreement you invest your time, money, or sweat equity into creating or growing the company. But when the time comes to formally collect on your equity i.e., the shares are never delivered. Even worse, you discover that the corporate minute book (the securities register) explicitly confirms that no shares were ever issued to you.
If you find yourself in this position, what legal options do you actually have?
Under section 266(3) of the Ontario Business Corporation Act, R.S.O. 1990, c. B.16 (OBCA) [1], an entry in the security register of a corporation, in the absence of evidence to the contrary, is proof that the person whose name appears is the owner of the securities described in the register (or certificate). There is a presumption that if your name is listed as a shareholder in the minute book (securities register), then you are a shareholder of the company. If it’s not, then the burden is on you, the unlisted shareholder, to establish “evidence to the contrary”.
Ontario courts have established a legal framework that allows a claimant to legally overcome the information contained in the minute book.
Glass v. 618717 Ontario Inc.
First, look to the principles explained by the court in Glass v. 618717 Ontario Inc., 2012 ONSC 535. Glass involved a dispute between business partners (brothers) over corporate control where one party attempted to claim a higher share ownership percentage than what was recorded in the minute book. The court, reviewing pertinent sections in the OBCA, confirmed that a minute book may not be accurate for a variety of reasons. Where that is the case, “evidence to the contrary” may override/displace the information contained in the minute book. The court will provide relief and a substantive remedy to the aggrieved “shareholder” if they are able to (i) demonstrate that the information is not accurate and (ii) do so by providing “evidence to the contrary”. The issue however for most lawyers and parties is what evidence will be sufficient to establish “evidence to the contrary”. This is an important consideration. In Glass, the plaintiff by counterclaim did not provide the kind of “evidence to the contrary”, which would have met the threshold required to overcome the presumption. There are reasons why, and briefly (because this Blog post is long enough See Glass, paragraphs 113 to 128):
1. Professionally Maintained Minute Books: The company’s legal counsel consistently updated the minute books and corporate filings showing a 50:50 split.
2. Convenient Reliance on Official Records: The party seeking to rebut the presumption repeatedly relied on the recorded 50:50 split when it benefited him (for tax deductions, banking guarantees, and marital negotiations). As the court noted, Ontario corporate law does not recognize a “fingers crossed” exception.
3. Binding Signed Agreements: The party signed key corporate documents acknowledging the 50:50 structure and could not escape them by claiming he “signed and ran.”
4. Explicit Director Resolutions: Signed resolutions explicitly confirmed the 50:50 ownership.
5. Unreliable Evidence: The late-stage evidence regarding an alleged verbal “side deal” was found to be unreliable and uncorroborated.
6. Ambiguous Financial Draws & Asset Splits: Unequal management fee draws did not prove unequal equity ownership, especially since no formal corporate dividends were ever declared.
However, the presumption was overcome in a recent case, paving the way for a successful challenge of the information contained in the corporate minute book.
The Blueprint: Dhaliwal v. Cheema
The example of a claimant successfully overcoming this difficult legal hurdle is Dhaliwal v. Cheema et al., 2025 ONSC 382. In Dhaliwal, the corporate share register and an executed share transfer document listed the respondent as the absolute 100% sole owner of a massive family trucking enterprise. The three applicants did not have any paperwork to support their position that their names ought to be included as shareholders in the minute book. They primarily relied on their oral agreement formed at the company’s inception over two decades prior that they were all 25% shareholders and equal owners.
The court adopted the Glass framework [2] and reaffirmed that corporate records are presumed accurate and play a vital role in governance. However, the court was persuaded that an unwritten oral agreement regarding beneficial share ownership can legally constitute the “compelling evidence to the contrary” required to overcome the information written in the minute book. The surrounding facts and evidence supported the recognized and unlisted shareholders’ claim.
The applicants in Dhaliwal succeeded where the claimant in Glass failed because they did not rely on a “he-said-she-said” memory. They produced a trail of long-term operational and financial conduct that made a sole-ownership narrative completely implausible:
- Up-Front Capital Injections: They proved they had personally contributed initial startup capital and transport trucks to launch the business’s foundational asset pool.
- Two Decades of Equal Treatment: For nearly twenty years, all four family members held senior executive titles, managed the entire enterprise collectively as peers, and drew identical $100,000 corporate salaries.
- Third-Party Financial Risk: Most critically, when the company secured multi-million dollar commercial bank financing, the lenders required all four individuals to sign personal guarantees. Internal corporate ledgers and corporate life insurance policies also tracked split shareholder accounts and distributed funds equally among the four.
In Dhaliwal, the court’s finding hinged on the distinction between legal ownership (what is registered in the minute book) and beneficial ownership (who actually holds the equity rights).
The court concluded that it was commercially absurd to suggest that the applicants would inject capital, collaboratively run a major enterprise for two decades, and assume massive personal liability to banks if they were merely paid employees. The court looked past the information contained in the shareholder register, held that the historical course of conduct proved the oral agreement, and ordered the corporate records rectified to grant the applicants their rightful 25% equity.
🏢 The Application to Ontario Business Owners
If you have been promised shares in your company but have not been issued those shares, or listed in the corporate minute book, you have remedies. The jurisprudence from Glass and Dhaliwal helps you:
- The Minute Book Can Be Overcome: A corporate register is a starting baseline, not an unassailable shield. If an oral agreement for shares exists, Ontario courts possess broad equitable powers to rewrite the minute book to protect you.
- Your Actions Must Match Your Claim: You cannot overcome the statutory presumption with a secret understanding or a vague fingers crossed handshake. To meet the Dhaliwal threshold, your historical behavior over the life of the business must reflect an ownership reality.
The Court Looks to the Outside World: How did you act vis a vis the outside world. Did you sign guarantees, were you listed in regulatory filings, tax filings, how were draws paid, etc. These actions reflect ownership and can help you obtain what you were originally promised.
[1] See also OBCA s. 139 (3): “The information in a record is admissible in evidence as proof, in the absence of evidence to the contrary, of all facts stated in the record, before and after dissolution of the corporation”. In fact the phrase “evidence to the contrary” appears approximately 8 times in the OBCA creating a presumption affecting various sections.