Executive Summary: Key Legal and Evidentiary Issues

• Dispute centers on alleged shareholder oppression under the Loi sur les sociétés par actions du Québec arising from investment, governance and dilution steps in a start-up beverage company.
• Validity and enforceability of the unanimous shareholders’ agreement, its amendments and the stock restriction agreement are scrutinized against Schaal’s claim that their combined effect is oppressive.
• Evidentiary weight of written contracts, negotiation emails and financing documents undermines Schaal’s narrative of a “machiavellian plan” and supports a finding that he freely consented to the contested transactions.
• Criteria for a provisional injunction (urgency, strong appearance of right, irreparable harm and balance of convenience) are applied strictly, especially given the company’s admitted insolvency.
• Denial or restriction of financial information to a significant shareholder-director is treated as potentially oppressive, justifying narrowly tailored disclosure orders to “level the playing field”.
• Monetary and structural interim remedies (salary, provision for costs, undoing share buy-back, expert at company expense) are refused because they lack a strong prima facie basis and would endanger an already insolvent start-up.

Facts of the case

Solutions Bello Inc. (Bello) is a Québec start-up specializing in filtered, flavored and electrolyte-infused water-based hydration drinks. It was formally incorporated with an antedated incorporation date of 8 July 2019, but the constituting paperwork was actually executed in April 2022 by co-founders Marc Schaal and Clément Bouland. Each subscribed to 500,000 shares and initially acted as the only shareholders and directors of Bello. In April 2022, the co-founders also signed a Stock Restriction Agreement (SRA) under which part of their 500,000 shares each was designated “restricted” and could be repurchased at a fixed nominal price of $0.0001 per share if certain conditions were met, while the balance would be valued at fair market value. The restricted portion was designed to decrease progressively over 36 months, typical of a vesting-style founder structure. In May 2023, Schaal and Bouland appeared on the television show “Dans l’œil du dragon”. They convinced “dragon” investor Georges Karam, acting through his investment vehicle Investissements Aylee Inc. (Aylee), to invest in Bello. Aylee subscribed for 111,150 shares in exchange for $200,000 (the “First Aylee Investment”), with Schaal and Bouland retaining their 500,000 shares each. A unanimous shareholders’ agreement (CUA) was executed between Schaal, Bouland and Aylee. Among other things, it provided for a three-member board of directors, one director designated by each founder and one by Aylee, and it contained protective provisions such as “Founders Approval” (veto rights) on certain key decisions. Over 2023, Aylee increased its financial exposure. On 2 August 2023, it made a second investment through a mix of equity (nearly $200,000) and a $200,000 loan, in exchange for 138,850 additional shares. Later that year, on 1 December 2023, Aylee injected a further $1 million through $400,000 in loans and $600,000 in equity for 180,000 shares (the “Third Aylee Investment”). As part of this round, the CUA was amended. The amendment increased the board from three to four members and allowed Aylee to name two directors, while each founder kept the right to designate one director. Schaal and Bouland also granted Aylee a possessory security (hypothec/pledge) over their 500,000 shares each to secure the repayment of $600,000 in loans. In November 2023, a wholly-owned subsidiary, Gestion Eaubello Inc. (Gestion), was created to handle sales and commercialization of Bello’s products. In 2024, Bello launched a broader financing round using SAFE-type (Simple Agreement for Future Equity) convertible instruments. Approximately $1 million in convertible debt was raised from multiple investors, including $250,000 from Aylee. The evidence showed that this round depended heavily on Karam’s reputation and network, which attracted additional investors to an otherwise early-stage, unprofitable company. On 21 August 2025, facing ongoing cash needs, Aylee converted $600,000 of debt into 200,915 Bello shares at a valuation of $0.05 per share and invested another $500,000 (“Fourth Aylee Investment”). This made Aylee the largest shareholder with about 38.68% of the shares, while Schaal and Bouland each held about 30%. A second amendment to the CUA accompanied this transaction. It raised the board size to five directors and allowed Aylee to appoint three directors, leaving each founder with the right to appoint one. At the same time, the original founders’ veto rights on certain major decisions (Founders Approval) were removed. Following this restructuring, the relationship between Schaal on one side and Bouland and Aylee/Karam on the other deteriorated. On 25 August 2025, Schaal was removed from day-to-day operations of Bello, although he remained a director and significant shareholder. In late August and September 2025, there were difficult exchanges about transferring responsibilities, access to platforms and accounts, and settling expenses. The Court noted a clear climate of mistrust by that time. On 25 September 2025, Schaal asked that his termination be formalized and that unpaid salary and expenses be paid. Bello then issued a formal termination letter dated 15 October 2025. Schaal did not seek reinstatement; instead, he wanted his shares bought out and compensation for what he viewed as a disguised or unjust dismissal. On 10 November 2025, Bello exercised its rights under the SRA and repurchased 62,505 of Schaal’s restricted shares at $0.0001 per share, leaving him with 437,495 shares (about 26.83% of Bello’s share capital). In December 2025, Aylee again injected urgent funding of $350,000 through secured convertible notes (a fifth investment). Throughout this period, Bello was not profitable and depended on periodic investments to survive. The most recent unaudited financial statements showed that it was insolvent on both a cash-flow and balance-sheet basis, with minimal cash on hand and no realistic ability, on the evidence, to pay all debts as they fell due or fully satisfy creditors through realization of assets.

The legal framework and agreements at issue

The case arises as a shareholder oppression proceeding under the Loi sur les sociétés par actions du Québec (LSAQ). Schaal alleges that Aylee/Karam and Bouland used their growing control and a series of financing and governance steps to orchestrate his exclusion from the company he helped found. He claims the combination of the amended CUA, debt conversions, additional share issues and the exercise of the SRA rights was oppressive, unfairly prejudicial and contrary to his reasonable expectations as a founder. At the core are three sets of contracts: the CUA (and its two amendments), the Stock Restriction Agreement, and the pledge/hypothec over the founders’ shares. The original CUA structured governance with a balanced board and founder vetoes over certain fundamental decisions. Each subsequent financing round, however, shifted governance further toward Aylee, in exchange for much-needed capital and debt relief. The first amendment allowed Aylee two out of four board seats; the second raised Aylee’s representation to three out of five seats and removed the Founders Approval veto rights. In parallel, Schaal and Bouland had already pledged their shares to secure loans from Aylee, giving the investor a powerful creditor position and potential control if defaults occurred. The SRA, signed when only the founders were shareholders, allowed Bello to repurchase a portion of the founders’ shares at a nominal price when certain conditions—such as termination of employment within defined time windows—were met. Schaal’s restricted shares were partly “vesting” over time and were therefore exposed to loss at the low contractual price if he ceased being employed before full vesting. Schaal’s case was that, taken together, these instruments were used in a “squeeze-play” to isolate him: increasing Aylee’s control, reducing his effective voting power, ending his employment and then triggering the repurchase of his restricted shares at a nominal price. The Court, however, emphasized that these were heavily negotiated, sophisticated commercial arrangements. Schaal had repeatedly signed or agreed to amendments, including at the time of the August 2025 financing round, when he and Bouland accepted the second CUA amendment and conversion of Aylee’s loans at $0.05 per share, in order to avoid enforcement of Aylee’s share security and to keep Bello afloat. For the purposes of this provisional stage, the judge held that such freely-negotiated contracts between sophisticated parties cannot easily be recast as oppressive simply because the bargain later appears unfavourable to one side or because the business underperforms.

The dispute and the provisional injunction request

On 22 January 2026, Schaal filed a formal oppression petition under the LSAQ. He sought a range of final remedies, primarily a court-ordered buy-out of his shares at fair market value and compensation for what he claimed to be an unjust dismissal. At the preliminary stage addressed in this judgment, he also requested a suite of provisional injunctions and interim measures intended to protect his position while the main case moved forward. Specifically, he asked the Court to: suspend the application of key clauses (articles 5 and 6) of the Second Amending Agreement to the CUA; suspend the effects of Bello’s forced repurchase of 62,505 restricted shares under the SRA; order Bello to pay him a monthly salary of $7,000 during the litigation; order a $75,000 provision for legal costs to be paid by Bello, under article 443 LSAQ; appoint an expert to determine the fair market value of his shares, with Bello funding the expert’s estimated fees of about $30,000; and compel Bello and Gestion to provide a detailed list of financial records, banking documents, QuickBooks access, minute books, certain legal retainers (subject to privilege) and access to his former professional email account, all to enable him to properly substantiate his claims. The defendants, including Aylee, Karam and Bouland, vigorously opposed the motion. They argued that the real “point of no return” in the parties’ relationship occurred months earlier, around August 2025, and that Schaal’s recourse was late and inconsistent with the urgent nature of provisional relief. They also stressed that Bello, as an insolvent start-up, simply did not have the financial capacity to support substantial interim payments, that contracts such as the SRA and CUA amendments were the product of free and informed consent, and that unwinding completed transactions or altering governance structures on an interim basis would be both unfair and destabilizing for the company and its other stakeholders.

The Court’s analysis of urgency and appearance of right

The Court began by reminding the parties that provisional injunctions are exceptional, discretionary remedies governed by Articles 510 and 511 of the Code de procédure civile and applied with great restraint. To succeed, a party must establish: (1) urgency; (2) a serious question to be tried, or appearance of right (and a particularly strong prima facie case where the order is mandatory in nature); (3) irreparable harm; and (4) that the balance of convenience (preponderance of inconvenience) favours the order. All four criteria must be met. On urgency, the defendants contended that Schaal should have acted in August 2025, when the Fourth Aylee Investment and second CUA amendment were executed and when he was removed from operations. The judge, however, adopted a more nuanced view in the oppression context. Recognizing that sophisticated commercial parties often spend time trying to renegotiate or settle disputes before commencing litigation, the Court dated the true “point of no return” to mid-November 2025, when exchanges became formal, lawyers became involved, and Schaal sent a put-on-notice letter invoking his rights and proposing mediation. From that time to the filing of the petition on 22 January 2026—roughly two months, straddling the holiday period—the Court held that Schaal had acted with sufficient diligence. Urgency was therefore satisfied. On appearance of right, the Court distinguished between the various forms of relief. It found a clear prima facie entitlement only to financial and corporate information. As a significant shareholder and sitting director, Schaal had contractual rights under the CUA and general corporate law rights to access detailed financial data, minute books and other documents necessary to understand Bello’s situation and to evaluate his legal options. Denial of such information is recognized in the case law as a particularly pernicious form of oppression, because it prevents a minority stakeholder from assessing and enforcing their rights. In contrast, the Court found that Schaal had not demonstrated a sufficiently strong prima facie right to suspend the second CUA amendment, undo the restricted-share repurchase, obtain a provision for costs, receive an interim salary, or force Bello to fund an expert valuation at this stage. The judge stressed that Schaal had knowingly and repeatedly agreed to the CUA amendments and financing structures, with full awareness that they diluted his control and increased Aylee’s board and voting power, in exchange for critical capital infusions and relief from the share pledge. Similarly, the SRA had been freely executed by Schaal and Bouland before Aylee even invested. Bello’s exercise of its repurchase right for 62,505 restricted shares at the nominal price, under the clear terms of that agreement, did not appear on its face to be unlawful or beyond the parties’ expectations. The Court drew on appellate authority warning that the oppression remedy cannot be used to rewrite a bad bargain or to generate rights that a party failed to negotiate in a commercial agreement. In short, Schaal’s broader oppression theory might ultimately raise a serious question at trial, but that did not translate into a strong, immediate appearance of right to the specific and far-reaching provisional orders he was seeking.

Irreparable harm and balance of convenience

Turning to irreparable harm, the Court again distinguished between the disclosure issue and Schaal’s financial and structural requests. On the information front, the judge accepted that preventing a minority shareholder-director from accessing detailed financial and operational data could cause irreparable prejudice. If Schaal were left in the dark, he would be unable to properly frame his claims, instruct experts or evaluate settlement options, and his case might progress under a persistent informational disadvantage. That kind of asymmetry in a shareholder dispute is not easily remedied by a later damages award. For the other heads of relief, the Court found no irreparable harm. The suspension of the second CUA amendment and of the SRA share repurchase primarily concerned rights with clear contractual bases and economic consequences that could, if ever found oppressive at trial, be addressed through damages, corrective orders or later adjustments. Schaal’s alleged loss on the repurchased restricted shares, for example, was readily quantifiable in money. Likewise, his claimed need for an interim salary, a provision for legal costs and company-funded expert fees related to financial prejudice fully measurable in monetary terms; they did not amount to irreparable harm in the legal sense. On the balance of convenience, Bello’s insolvency proved decisive. Its latest financials showed persistent insolvency, minimal liquidity and a heavy dependence on new funding rounds. Ordering it to pay an interim salary of $7,000 per month, a $75,000 provision for costs, and approximately $30,000 in expert fees would have imposed a burden that the company simply could not bear. The Court considered that such orders could force Bello to seek formal creditor protection or even threaten its continuity as a going concern, effectively destroying the residual value of the shares held by all shareholders, including Schaal himself. Similarly, suspending established governance arrangements and completed transactions risked paralysing corporate decision-making and undermining the company’s ability to obtain new financing. Conversely, granting Schaal access to corporate information imposed minimal burden on Bello and its controllers, beyond organizing and transmitting records and providing read-only access to certain platforms and accounts. The informational orders would help put the parties on a more equal footing for the litigation and could even facilitate settlement by clarifying the company’s true financial condition. This tipped the balance strongly in favour of granting disclosure relief, and against the broader financial and structural orders Schaal demanded.

Outcome and practical implications

In its conclusion, the Superior Court of Québec partially granted Schaal’s application, but only in one narrow respect. It ordered Bello, Gestion and the defendant stakeholders to provide Schaal with a defined list of financial and corporate documents and to give him read-only access to accounting software, banking information, minute books and other operational records, subject to limited protection for solicitor-client privileged communications. The order also allowed Schaal access to his former professional email account strictly to retrieve information and documentation related to Bello and Gestion’s operations. All of Schaal’s other provisional requests were dismissed. The Court refused to suspend the second amendment to the CUA, declined to undo or suspend the November 2025 restricted-share repurchase under the SRA, denied his request for a $75,000 provision for legal costs, rejected the demand for an interim salary of $7,000 per month, and declined to order Bello to appoint and pay an expert to value his shares. The question of costs of the motion was expressly reserved (“frais à suivre”), meaning no immediate award of costs in favour of any party. As a result, at this interim stage, Schaal can be described as only partially successful: he won access to critical financial and corporate information, which the Court considered essential to ensure that the oppression dispute proceeds on a level evidentiary playing field. However, the defendants—Aylee/Karam, Bouland, Bello and related parties—were successful in resisting every monetary and structural provisional measure that might have altered governance, unwound completed share transactions, or imposed substantial payments on an insolvent company. No damages, salary, provision for costs or expert fees were ordered, and the Court did not fix or award any monetary amount in favour of any party at this stage; the total monetary award in favour of any party is therefore effectively nil, and the exact figure for costs, if any, cannot yet be determined.