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Corporations - Derivative Actions (2). Sherif Gerges Pharmacy Professional Corp. v. Niam Pharmaceuticals Inc.
In Sherif Gerges Pharmacy Professional Corp. v. Niam Pharmaceuticals Inc. (Ont Div Ct, 2026) the Ontario Divisional Court dismissed an OBCA appeal, here brought against a motion judge's OBCA Part XIII "investigation order appointing the inspector and granted leave to bring the derivative actions", these latter under OBCA s.246.
Here the court considered whose interests should be had regard to when granting s.246 leave to sue:[69] The motion judge found that as noted in Crescent (1952) Ltd. v. Jones, 2011 ONSC 756, at para .36, looking at the benefits from the point of view of some of the shareholders is the wrong point of view – it is the point of view of the corporation itself that should be considered: Decision, at para. 64. The motion judge held, at para. 65:As the court found in Crescent, if funds have been diverted from a corporation, it may be that the shareholder will benefit, but remedying the alleged wrongs must also be in the corporations’ interest: see Crescent at para 38. Here if Mr. Vora has diverted funds from the Pharmacies to his related companies, then it must be in the Pharmacies’ interest to have those funds returned. Similarly, it is not disputed that Mr. Vora has removed approximately $2 million from Woodbine Downs and transferred those funds to Niam (a company related to Mr. Vora). It is in Woodbine Downs’ interest to remedy that alleged wrong to Woodbine Downs.
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