Craig Ferris, KC, FCIArb., Quoted in Benefits Canada Article About Employer Rights for Repurchasing Shares

Lawson Lundell lawyer Craig Ferris, KC, FCIArb., was quoted in an article, “B.C. court rules employer not entitled to dictate terms of share repurchases under stock option plan,” by Benefits Canada. 

The article centres on a decision by the British Columbia Supreme Court that employers don’t have an “unfettered” right to dictate the terms of a repurchase of shares held by former employees through a stock option plan. The article explains that two employees, previously employed by Spocket Inc., both exercised their share options when leaving the company. Both had agreed to the company’s right of first refusal, but according to the ruling, it didn’t give the company a unilateral right to compel repurchase.  The two also signed a power of attorney appointing Spocket’s chief executive officer as their attorney, granting him full rights of substitution to sign corporate documents, including shareholder consents and amendments to shareholder agreements.

Years later, the company amended the refusal right (without telling the former employees), allowing the company to repurchase their shares whenever certain “trigger events” occurred, including termination of employment. Craig represented the former employees in the case.

“The message is that even when discretion is granted under the terms of a plan, that discretion is not necessarily unlimited, and it’s important to follow a proper process,” Craig said. “The decision also stands for the proposition that even executives who have full powers of attorney can’t sign anything they want.”

The judge found that the amendments and the process used were not supported by the plan’s terms and contradicted the former employees’ reasonable expectations. The court stressed that significant changes like removing shareholder rights require a proper process and cannot be done secretly or retrospectively.  Craig, who is a partner at Lawson Lundell, is one of BC’s most accomplished litigation lawyers and acts for clients in commercial and business disputes. His areas of focus include shareholder remedies, trust, pension and fiduciary disputes, securities and transactional litigation, product liability, mining disputes and real estate litigation.

Read the full Benefits Canada article here.