Hello All

I`m working on an interesting problem (at least to me) involving a situation where a corporation misallocates shares after a reorganisation.

Facts like this:

There is a closely held family company.

Before the reorganisation, there is one class of shares and 10 shareholders. Father, Brother, and 8 children.

The reorganisation document (amendment to the articles?) provides that shareholders turn in shares and for every share they turn in they get 1 class A voting and 3 class B non-voting

BUT --- wait for it --- the shares are turned in but the president, (the father), decides to keep the A for himself and another officer (his brother) and issues everyone else (the children) B shares alone. So, instead of getting 1 A and 3 B, the shareholders all got 4 B, no A. The father and brother thus keep total control foo the voting shares.

Assume 50 years have passed. An executor discovers the mistake.

Is there an action? If so, it reformation? Recision? Quo warranto?

Assume a jurisdiction in the US, but wondering if that matters. (I think I know the Canadian answer).

Assume as well that laches can be dealt with.

Granted, these facts are thin, but I`m trying to not to over-complicate my problem. I`m ignoring breach of fiduciary duty for the moment.

I wonder if anyone has any idea on how or if an action might be brought. Purely theoretical, but wanted to get some reaction before I go too far down a road that won't pan out.

Any ideas gratefully accepted- especially from American colleagues as I`m trying to put this problem there for reasons not relevant here.

Thanks.




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Matthew P. Harrington
Professeur titulaire

Faculté de droit
Université de Montréal
3101 chemin de la Tour
Montréal, Québec H3T 1J7
514.343.6105
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