The Ontario Superior Court of Justice recently stepped in to resolve a complex corporate governance dilemma facing Dye and Durham Limited, a major provider of cloud based software and technology solutions for legal and business professionals1. The company found itself in what Justice F.L. Myers described as a classic Catch 22, a situation where every available option seemed to result in a breach of provincial corporate law. The dispute centered on the timing of the company’s annual general meeting and the delivery of its audited financial statements, which had been delayed following a year marked by significant internal upheaval and regulatory scrutiny. For Dye and Durham, the challenge was to balance the statutory rights of shareholders to receive timely financial information against the strict timelines mandated by the Ontario Business Corporations Act for holding annual meetings.
The background of the case involves a period of intense volatility for the corporation. Throughout the 2025 fiscal and calendar years, Dye and Durham underwent substantial changes to its board of directors and its senior management team. These governance shifts, combined with ongoing communications with the Ontario Securities Commission regarding the presentation of financial results, led to delays in the completion of the company’s audited financial statements for the fiscal year ending June 30, 2025. Under standard securities regulations, these statements should have been filed by late September 2025. Because the company missed this deadline, its shares became subject to a management cease trading order, which eventually escalated into a full failure to file cease trade order issued by the Ontario Securities Commission in mid December.
As the end of the calendar year approached, the company sought to hold its annual general meeting on December 31, 2025. However, the Ontario Business Corporations Act creates a difficult intersection of requirements for such meetings. Section 94 of the Act dictates that a corporation must call an annual meeting no later than fifteen months after its previous annual meeting. More specifically, section 154 requires directors to place audited financial statements before the shareholders at that meeting. These statements must cover a period that ended no more than six months prior to the date of the meeting. For Dye and Durham, whose fiscal year ended on June 30, the six month window was set to expire exactly on December 31, 2025. This meant that if the meeting were delayed even by a single day into January 2026, the company would technically be in violation of the requirement to present statements that were no more than six months old.
The problem was further complicated by the notice requirements set out in the legislation. Section 154 also stipulates that an offering corporation must send copies of the audited financial statements to shareholders at least 21 days before the annual meeting. To hold a meeting on December 31, Dye and Durham would have needed to send its audited statements by December 10. However, the company was unable to meet that deadline and committed instead to releasing the statements on or before December 23. This created the legal deadlock. If the company held the meeting on December 31, it would satisfy the six month rule but violate the 21 day notice rule. If it postponed the meeting to provide shareholders with 21 days of notice, the meeting would take place in 2026, thereby violating the rule that the financial statements must be within six months of the meeting date.
The legal proceedings featured significant opposition from Ronnie Wahi, a former chief financial officer and former board member of the company. Mr. Wahi, who is currently seeking a seat on the board of directors, argued that the company was interpreting the legislation too narrowly. He suggested that the six month rule in section 154 did not necessarily require the annual meeting to be held within six months of the fiscal year end. In his view, the Act allowed a corporation to rely on unaudited quarterly or interim financial statements for the period following the year end. By using the first quarter results from September 30, 2025, as the relevant benchmark, Mr. Wahi argued that the company could move its meeting into 2026 without violating the statute, thereby giving shareholders the full 21 days to review the audited annual figures.
Justice Myers rejected this interpretation of the Ontario Business Corporations Act. The court noted that if the legislation intended for quarterly statements to reset the six month clock, it would have been drafted with much greater specificity regarding how those interim periods should be handled. The judge emphasized that the Act is a businessman’s statute intended to deal with the ordinary course of operations. Justice Myers found that the more sensible reading of the law, which was supported by prior court decisions such as the Falconbridge case, is that the annual meeting must be held within six months of the fiscal year end. The court noted that requiring a corporation to report on a stub period of a few weeks or months just to accommodate a short delay in a meeting was neither realistic nor feasible for a public company.
Facing this statutory impasse, the company turned to the remedial powers of the court. Under section 106 of the Act, a court has the authority to order that a meeting be called or conducted in a specific manner if it is otherwise impracticable to do so. Additionally, section 253 allows the court to issue compliance orders to regularize corporate actions. Dye and Durham asked the court to exercise these powers to allow the December 31 meeting to proceed, despite the fact that shareholders would only have eight days, rather than 21, to review the audited financial statements once they were released on December 23.
Mr. Wahi contended that eight days was insufficient, especially given that the period between December 23 and the meeting included Christmas, Boxing Day, and weekends. He argued that shareholders, particularly individual investors, would have very little time to digest the financial reports before the deadline for submitting proxies on December 29. He emphasized that the company had been in a state of chaos and that shareholders needed the full statutory notice period to exercise proper oversight. He pointed out that the company had already faced an investigation by the Ontario Securities Commission and had struggled to provide its auditors with the necessary information to complete the year end report.
In response, the company provided evidence from its current Chief Financial Officer, Martha Bell. She testified that the board of directors had met to consider Mr. Wahi’s concerns but determined that proceeding with the December 31 meeting was in the best interests of the corporation. The board noted that the market had already been informed of the delays and that the company had provided preliminary unaudited financial results in November. The board argued that because Dye and Durham is a liquid, regularly traded stock, information is typically reflected in the share price within a few business days. Furthermore, the board believed that most shareholders would prefer the certainty of the scheduled meeting rather than a prolonged delay.
Justice Myers ultimately decided to defer to the business judgment of the Dye and Durham board. The court cited the Supreme Court of Canada’s decision in the BCE case, which establishes that directors have a fiduciary duty to act in the best interests of the corporation and must treat stakeholders fairly, though they are not required to please every individual interest group. The court found that there was a presumption that the board was acting in good faith and that their request to keep the meeting on December 31 was a fit and proper resolution to the legal Catch 22. Justice Myers noted that shareholders who felt ill equipped to vote on specific resolutions would have the power to seek an adjournment during the meeting itself.
The court’s order allowed the annual general meeting to proceed as scheduled on December 31, 2025, on the strict condition that the audited financial statements be released by December 23. The judge clarified that this order did not absolve the company or its directors from any potential liability for breaches of statute, regulations, or fiduciary duties. It was merely a procedural mechanism to allow the meeting to happen within the confines of the law. The Ontario Securities Commission did not oppose the relief, provided the court made it clear that its jurisdiction over the company’s securities law obligations remained intact.
In a final note regarding the conduct of the litigation, Justice Myers awarded Mr. Wahi his full legal costs. The court likened the situation to a case involving the misadministration of a trust, where a party’s participation is necessary to help the court resolve a problem created by the entity itself. The judge praised Mr. Wahi’s legal team for providing helpful arguments that forced the corporation to sharpen its legal position and clarified the issues for the court. By indemnifying Mr. Wahi for his costs, the court acknowledged that his intervention served a broader corporate interest by ensuring the legal questions were thoroughly vetted before a decision was reached.
Read more about business cases in Canada here.
