Executive Summary: Key Legal and Evidentiary Issues

• Dispute between 50/50 shareholders over the exercise of a forced buy–sell (“shotgun”) clause in a shareholders’ agreement governing Madame Alice inc.
• Alleged incomplete and disputed financial information (including contested debt of 35 030,04 $ and claimed contribution of 41 731,00 $) affecting the shareholder’s ability to make an informed shotgun election.
• Urgent need for interim relief because the contractual 30-day deadline to accept or refuse the shotgun offer was expiring on the very day the safeguard application was presented.
• Risk of serious or irreparable prejudice if the plaintiff were deemed to accept the offer by silence without access to full 2025 financial statements or interim statements.
• Judicial assessment of the classic criteria for a safeguard order: urgency, appearance of right, serious or irreparable harm, and balance of convenience in a shareholders’ dispute.
• Court-ordered suspension of the shotgun mechanism, disclosure of financial statements, and maintenance of the corporate status quo, with costs awarded in favor of the plaintiff though no specific monetary amount is set out.

Background and corporate structure

Madame Alice inc. is a Québec corporation created on 1 January 2025 following the merger of two existing companies: 9485-1300 Québec inc., owned by Andréanne Simard, and Côté Fleur Côté Couleur inc., owned by Sarah Potvin. After the merger, both women became equal shareholders, each holding 50 % of the shares in Madame Alice inc. under a shareholders’ agreement signed on 2 May 2025. The company operates two florist shops, one in Limoilou and the other in Ste-Catherine-de-la-Jacques-Cartier. Although each branch is operated separately in practice, the revenues and expenses of both are pooled within the single corporate entity.

Deterioration of the business relationship

From September 2025 onward, the business relationship between Simard and Potvin deteriorated progressively. Disagreements arose concerning accounting practices, human resources issues, and day-to-day operations. Simard claims that she had repeatedly asked Potvin for explanations regarding the accounting and for an update of the bookkeeping, but that she did not receive satisfactory answers. By October 2025, the trust between the two co-owners had effectively broken down. In December 2025, the parties attempted mediation to resolve their differences, but this process failed, leaving the shareholders still seeking a way to unwind their relationship and separate their interests.

The shotgun clause and contested financial positions

The shareholders’ agreement included a detailed “shotgun” clause at article 10. This clause sets out a forced buy–sell mechanism allowing one shareholder to offer either to buy out the other or to be bought out at a specified price, with the recipient then having to elect whether to sell or to buy on the proposed terms. Articles 10.1 to 10.9 describe: the conditions of the offer, the time limit for acceptance, how the response must be transmitted, what constitutes acceptance or refusal, how closing of the sale is to occur, the limits of the mechanism, and the requirement of prior notice. In this case, both shareholders wanted to end their business relationship and were prepared, in principle, to use the shotgun clause to do so. On 6 March 2026, Potvin formally notified Simard of her intention to invoke the shotgun mechanism under article 10. She offered to purchase all of Simard’s shares in Madame Alice inc. for 40 000,00 $, subject to certain conditions. Under the clause, Simard had 30 days from receipt of the notice to either accept and sell her shares at that price or refuse and instead elect to purchase all of Potvin’s shares for the same 40 000,00 $, this second option having to be accompanied by satisfactory proof of funds. The notice made clear that failure to respond within the prescribed period would be deemed acceptance of the offer to sell. A further complication arose from disputed internal accounting between the shareholder and the company. Simard was told, based on incomplete financial documentation, that she owed 35 030,04 $ to Madame Alice inc., which she denied. She also asserted that she had contributed 41 731,00 $ to the company in the form of a grant or in-kind goods and services for the corporation’s exclusive benefit, a claim she said Potvin refused to recognize. These conflicting amounts were important because the shareholders’ agreement contemplated that any debt allegedly owed by Simard to the company would be payable when her shares were bought out, and any unrecognized contribution could materially affect the real economic value of her stake and the fairness of the proposed transaction.

Imminent deadline and the safeguard application

The contractual deadline for Simard to respond to the shotgun offer expired on 13 April 2026 at 17:00. On that same day, at 14:00, she brought an application in the Superior Court of Québec for an ordonnance de sauvegarde (safeguard order), a form of urgent interim relief. She sought, in substance, four key measures: suspension of the deadline to respond to the shotgun offer, an order preventing the parties from finalizing any share transfer arising from the shotgun notice, an order requiring Potvin or the company to provide the financial statements or interim financial statements for 2025 within a short delay, and a similar order directed to any other interested person who held those financial statements. Simard argued that without complete and reliable financial information, she could not make an informed decision on whether to sell her shares for 40 000,00 $ or instead purchase Potvin’s shares for the same price. She emphasized that the alleged debt of 35 030,04 $ and her claimed contribution of 41 731,00 $ were unresolved and that the manner in which they were treated would significantly influence the economic outcome of any shotgun election. In her sworn statement of 10 April 2026, she explained that she needed full disclosure of all relevant financial information before exercising her choice, and that she therefore asked the court to suspend the response deadline and compel the delivery of the 2025 financial statements (or interim statements, if any) so she could decide whether to buy or sell her shares in an informed way.

Legal framework for safeguard orders

The court analyzed the request under the well-established criteria for granting a safeguard order, which are similar to those for a provisional interlocutory injunction. Four elements must be considered: urgency, appearance of right (or prima facie case), the risk of serious or irreparable prejudice, and the balance of convenience between the parties. On urgency, the court found the criterion clearly satisfied. Simard’s contractual time limit to accept or refuse the offer was expiring the same day the application was filed, and the shareholders’ agreement provided that silence within the delay would be treated as acceptance of the shotgun offer. The court noted that discussions between the lawyers had continued up to 9 April 2026, and that Potvin’s lawyer had even asked for time until 13 April at 17:00 to answer issues raised by Simard’s counsel, leaving Simard with very little practical time to decide. The shareholders’ agreement itself underscored the consequences of inaction: under clause 10.4, a shareholder who failed to send a response within the prescribed delay was deemed to have accepted the offer and was bound to give full effect to that acceptance. On the appearance of right, the court focused on whether Simard had a credible argument that she was entitled to obtain further financial information before having to commit irrevocably under the shotgun clause. It noted that the shotgun mechanism was detailed and carefully structured in the shareholders’ agreement, that both parties wished to terminate their business relationship and apply the clause, and that the dispute now centered on whether Simard could insist on seeing full 2025 financial statements before making her decision. Drawing on prior case law, including Sovell c. 2727901 Canada inc., the court accepted that requiring a shareholder to exercise a shotgun option without knowing the full financial impact—especially in the face of disputed debts and contributions—would be akin to signing a blank cheque. This sufficed to establish an appearance of right in favor of granting temporary relief so she could access more complete information.

Assessment of prejudice and balance of convenience

The court then addressed the risk of serious or irreparable prejudice. Without a safeguard order, Simard would have to elect to buy or sell (or risk being deemed to have accepted the offer) based on incomplete and contested financial information. Because the agreement made her silence an acceptance, any failure to respond in time would automatically bind her to a transaction whose true economic consequences she could not fully assess. The court considered that this risk met the threshold for serious or irreparable harm in the context of an urgent interim application. On the balance of convenience, the judge considered that the proposed safeguard measures were narrow, time-limited, and tailored. The order would be confined to obtaining the 2025 financial statements or interim financial statements and to a short suspension of the shotgun mechanism. While this might cause some delay and inconvenience to Potvin, the court found that this prejudice was not significant when compared to the potential prejudice to Simard if she were forced to proceed essentially in the dark. Furthermore, Potvin’s lawyer had indicated that she was willing to answer requests for financial information before pursuing certain remedial measures under clause 10.7, although she preferred that Simard first exercise her shotgun option. The judge also noted that negotiations would likely continue around the alleged 35 030,04 $ debt and the claimed 41 731,00 $ contribution, but concluded that providing financial statements in advance of the election was the more equitable course. In light of this, the balance of convenience favored granting interim relief that would temporarily preserve the status quo while ensuring Simard had adequate financial disclosure.

Outcome and impact of the decision

The Superior Court granted Simard’s application for a safeguard order. It ordered Potvin, or any other person holding them, to provide Simard with the financial statements or interim financial statements of Madame Alice inc. for the year 2025 within 15 days of the judgment. It suspended Simard’s deadline to respond to the shotgun offer until 20 May 2026 at 17:00, after which the contractual shotgun mechanism under clause 10 would resume its operation. The court also ordered maintenance of the status quo by prohibiting any changes to the corporate structure or assets of Madame Alice inc. during the life of the safeguard order and directed that the judgment be enforceable notwithstanding appeal. Finally, the court awarded costs of justice in favor of Simard. As a result, the successful party in this decision is the plaintiff, Andréanne Simard. She obtained an extension of time to respond to the shotgun offer, access to the 2025 financial statements or interim financial statements, and an order preserving the company’s structure and assets while she decides whether to buy or sell. The judgment grants her costs (“avec frais de justice”), but it does not specify the exact monetary amount of those costs, and no separate damages or quantified monetary award is ordered in her favor, so the total amount in her favor cannot be determined from this decision alone.