Executive Summary: Key Legal and Evidentiary Issues

• Three dissenting shareholders challenged whether funds held in trust by Signalchem were sufficient to cover the statutory payout value of their shares under the Business Corporations Act (BC).

• At issue was the proper valuation of Signalchem's shares following the US$48 million sale of its subsidiary, Signalchem Biotech, which triggered dissent rights.

• Petitioners sought to compel arbitration under s. 245(2)(a) of the BCA, which the Court declined absent mutual agreement between the parties.

• Injunctive relief was requested to force Signalchem to deposit additional funds into trust pending final determination of payout value.

• Competing valuation evidence was weighed, including Signalchem's May 2022 Business Plan (US$437 million) and the Evans Report (approximately $80 million fair market value).

• Only partial relief was granted: a release of 50% of funds already held in trust to the petitioners, with all other substantive applications dismissed.

Background and facts of the case

This judgment of the Supreme Court of British Columbia, rendered by Madam Justice Sharma on April 20, 2026, addresses three related proceedings heard together involving Signalchem Lifesciences Corporation, a private biotechnology company with 39,710,871 common shares that develops medicines aimed at treating cancer and other significant diseases. On October 16, 2023, Signalchem's shareholders approved a special resolution authorizing the sale of its wholly-owned subsidiary, Signalchem Biotech Inc., to Sino Biological, Inc. for US$48 million. This sale was a triggering event under s. 238(1)(e) of the Business Corporations Act, S.B.C. 2002, c. 57, giving rise to dissent rights for shareholders who opposed the resolution. The petitioners—Vivavivo Inc. (holding 2,857,142 shares, approximately 7.2% of total shares), Amarjeet Sidhu (412,727 shares) and Viceroy Investments and Holdings Ltd. (200,000 shares), and Avtar Gill (60,000 shares)—each provided notice and dissented, triggering Signalchem's statutory obligation to purchase their shares at "payout value," defined under s. 237(1) as the "fair value that the notice shares had immediately before the passing of the resolution adopting the arrangement."

The consent order and funds held in trust

Following stalled payout discussions, Vivavivo filed its petition on June 26, 2024, and on July 2, 2024 filed a notice of application seeking an injunction, or alternatively an order that Signalchem pay into court US$3,456,000, and production of financial statements. The matter was resolved by a Consent Order entered July 16, 2024, under which Signalchem agreed to pay US$4,661,766.36 into an interest-bearing trust account "pending further Order of this Court or agreement of the parties." Signalchem voluntarily paid a greater amount into trust—US$5,759,400.32 in total—in part to account for the payout to Viceroy and Mr. Gill, who had not yet filed their petitions when the Consent Order was entered. The Consent Order expressly stated that nothing in it should be construed as evidence of or admission regarding the payout value. Counsel indicated the amount was converted to Canadian funds in an interest-bearing account, so the current value is somewhat unclear.

The valuation dispute

The central dispute concerned the valuation of payout owed by Signalchem. The petitioners relied principally on Signalchem's internal report titled "Business Plan" dated May 2022, which, in a section titled "Valuation Estimate and Exit Strategy" at page 62, stated the then current fair value of the company to be US$437 million. They also pointed to a PowerPoint titled "Corporate Overview" dated October 2023 that referenced a licensing agreement to a Chinese entity resulting in a payment of at least US$210 million to Signalchem, and a subscription agreement valuing 935,150 of Signalchem's shares at $2.71614 per share for a total payment of $2.54 million. The petitioners asserted Signalchem Biotech was the "cash cow" of the company and noted that in May 2024 shareholders were informed the company had received just over $35 million from the sale and could expect dividends from half of those proceeds in July 2024. Signalchem countered that the Business Plan itself qualified its valuation statement and that realistically the actual amount was closer to $100 million. Signalchem also relied on a report dated January 20, 2025, prepared by Evans and Evans Inc. (the "Evans Report"), which, after addressing the subsidiaries, valued the company at between $80,300,080 and $80,370,000, applying a 15% discount because Signalchem is a privately held company. Signalchem submitted this yielded a fair market value of $1.68 to $1.75 per share, compared to approximately $2.20 per share currently held in trust, and that the dividend paid out amounted to only $0.61 per share. The petitioners challenged the Evans Report as not independent and questioned its methodologies, noting it valued Signalchem Biotech at $48,330,000 to $50,000,030 despite its actual sale price of US$48 million.

The Newmac litigation complication

A further factor in contention was parallel litigation involving a failed amalgamation. In May 2021, Newmac Resources Inc. came to an agreement with Signalchem for an amalgamation, but it did not proceed. Newmac started litigation in China, which it later abandoned, and in December 2023 filed a lawsuit in the Supreme Court of British Columbia pursuing the same relief, asserting it would have received a 7.21% interest in the amalgamated entity and seeking damages of at least US$31,724,000 (apparently based on the US$437 million Business Plan valuation). Signalchem took the position that the valuation of shares could not be disentangled from the Newmac litigation. At the hearing, Signalchem raised a concern about possible double recovery based on its allegation of a possible corporate relationship between Vivavivo and Newmac, who were represented by the same lawyer; however, no evidence of such a corporate relationship was before the Court. The petitioners characterized the Newmac claim as merely a contingent liability that could be taken into account in the valuation process.

Application for arbitration

The petitioners—specifically Mr. Gill in his petition—sought referral of the payout-value determination to arbitration under s. 245(2)(a) of the BCA, arguing arbitration would be more cost-effective and expeditious, and would permit selection of an arbitrator with specific experience in this area of law. Signalchem opposed, and the Arbitration Act, S.B.C. 2020, c. 2, was noted as premised on parties agreeing to arbitrate a current or potential future dispute. Justice Sharma held that s. 245(2) empowers—but does not make mandatory—a reference to arbitration, and that it is contrary to the fundamental tenets of arbitration for the Court to force parties to arbitrate in the absence of their agreement. On the facts, the Court was not persuaded that arbitration would be cost-effective or more expeditious given Signalchem's opposition, and declined to refer the matter to arbitration or to the registrar.

Application for injunctive relief

The petitioners sought orders that 50% of the funds currently held in trust be released to them, and that Signalchem be ordered to deposit additional amounts of US$9,341,889.32 and US$7,206,306.14 pending final resolution. Applying the three-part RJR-MacDonald test, the Court accepted there was a serious question to be tried, given the statutory right to payout and some evidence consistent with the petitioners' position that the money set aside may be inadequate. However, on irreparable harm and balance of convenience, the Court distinguished the petitioners' cited authorities—Bradley Resources Corporation v. Kelvin Energy Ltd., 1985 ABCA 65; First Choice Capital Fund Ltd. v. First Canadian Capital Corp., 1997 CanLII 11040 (Q.B.); and Conn v. Twenty Two Degree Energy Corp., 2010 ONSC 4598—on the basis that, unlike those cases, the petitioners here already had a large fund safeguarded towards the payout value. The Court found the petitioners' evidence amounted to no more than a suspicion that the amount held would prove inadequate, and was not persuaded there was a risk the petitioners would be unable to receive their payout should the court ultimately determine more is owed.

Ruling and outcome

Justice Sharma dismissed the applications to refer the matter to arbitration and for injunctive relief requiring additional deposits into trust. The only relief granted in favour of the petitioners was an order that 50% of the funds currently held in trust be released to all petitioners in proportion to each petitioner's shares, the Court noting it was given no reason why the petitioners could not receive some of the funds already set aside, which may be necessary in part to fund the litigation. The Court also issued detailed procedural directions under s. 245(2)(c) of the BCA and its inherent jurisdiction, setting down a two-day hearing at the Vancouver Law Courts no earlier than September 15, 2026 and no later than December 18, 2026, to determine the payout value, with prescribed timelines for affidavits (Signalchem by May 15, 2026; petitioners by June 26, 2026), written submissions capped at 25 pages, and a joint record. Costs of the hearing were deferred to the presider who hears the petitions. Overall, Signalchem was the largely successful party, successfully resisting both the arbitration referral and the demand for additional trust deposits; the petitioners obtained only the partial release of 50% of the funds already held in trust, the exact dollar amount of which cannot be determined from the decision since counsel indicated the trust funds had been converted to Canadian funds in an interest-bearing account and the current value was "somewhat unclear."