Executive Summary: Key Legal and Evidentiary Issues

• Directors' meetings held on April 23 and 24, 2025 were conducted without notice to Michael Liu, a sitting director, rendering the resolutions passed at those meetings invalid at common law.
   
• The Impugned Resolutions — terminating Michael as executive chairman and issuing approximately 106 million common shares to Anthony Liu at a nominal price — were found to be of no force and effect.
   
• Central to the dispute was whether s. 229 of the Business Corporations Act, S.B.C. 2002, c. 57 (BCA), which allows the court to remedy corporate mistakes, could be applied to cure deliberate and intentional non-compliance with notice requirements.
   
• Section 228 of the BCA was found to grant the court broad remedial discretion to invalidate corporate acts taken in contravention of a company's articles, even where the conduct was deliberate rather than inadvertent.
   
• AtlasHub Holdings Ltd., as majority common shareholder, held a reasonable expectation that Acel Power Inc.'s constating documents and applicable corporate law would be complied with, and that expectation was violated by the other directors' conduct.
   
• Anthony Liu's cross-petition alleging unjust enrichment as justification for the share issuance was dismissed, as the court found he was never validly issued the 106 million common shares.
   

Facts of the case

AtlasHub Holdings Ltd. ("AtlasHub") is a company incorporated on May 8, 2015, wholly owned by the M&L Family Trust (the "Liu Family Trust"), a discretionary trust of which Michael Liu and his wife Loretta Fung are the only trustees, with their three children as beneficiaries. AtlasHub's principal is Michael Liu. Acel Power Inc. ("Acel"), a British Columbia start-up developing and marketing electric-powered motors for boats, was incorporated in June 2021 with AtlasHub as its sole shareholder. At incorporation, AtlasHub invested $200,000 and received 67 million common shares of Acel. Michael was appointed chairman, his son John was appointed president, and his son Anthony (Yu-Chen Liu, also known as Anthony Liu) was appointed CEO; all three were elected as directors.

Between 2021 and May 2024, AtlasHub invested an additional approximately $1,700,000 in Acel. Other investors — generally contacts or associates of Anthony or John — invested approximately $4,300,000 in common shares. In 2023, Anthony and John connected with Brad Allen, a venture capital investor who became managing partner of Tau Capital ("Tau"). After conducting due diligence, Tau agreed to invest US$9 million into Acel, conditioned on a number of agreements being entered into, including a Preferred Share Purchase Agreement, an investors' rights agreement, a Reverse Vesting Agreement, and a voting agreement. The investors' rights agreement provided, among other things, that the majority of common shareholders (at that time, AtlasHub) would appoint four of the five directors to the board, and that Tau would appoint one director. By May 2024, following the conversion of AtlasHub's approximately $1.7 million in debt to common shares, AtlasHub owned 70,874,587 out of 81,853,584 outstanding common shares, representing 86.59% of the common shares. In May 2024, Acel also issued amended and restated articles (the "Articles") that included, among other things, a provision requiring that all directors receive notice of board meetings (s. 17.6), and a provision that the accidental omission to give notice does not invalidate any meeting (s. 17.8).

Following Tau's investment, disputes arose between Michael and the other directors over the use of Acel's funds. When Tau's money was deposited into Acel's CIBC bank account, Michael — who held signing authority along with Loretta — caused approximately $5 million of the Tau investment to be placed into Guaranteed Investment Certificates (GICs), rather than directing the funds toward Acel's intended purposes of increasing sales, marketing, and production. Michael also refused to authorize a down payment of US$540,748 to Kha Shing and Vivic under a January 2025 co-development agreement for the world's first electric propulsion yacht, causing the opportunity to be lost. He further directed the payment of approximately $416,000 in back salary to himself, and the pre-payment of lease obligations between Acel and Milo Enterprises Inc. ("Milo"), neither of which had been approved by the other directors.

Policy, legislative, and contractual provisions at issue

The primary statutory provisions at issue were ss. 227, 228, and 229 of the BCA. Section 227 governs shareholder complaints of oppressive or unfairly prejudicial conduct and provides shareholders with the ability to apply to court for a wide range of remedial orders. Section 229 provides the court with discretion to remedy "corporate mistakes," defined as omissions, defects, errors, or irregularities occurring in the conduct of a company's business or affairs. Section 228 addresses compliance or restraining orders and permits any complainant to apply to court for an order where a company or its directors or officers contravene the BCA or the company's articles; subsection (3) grants the court broad discretion to make any order it considers appropriate. Article 17.6 of Acel's Articles required that reasonable notice of each directors' meeting be given to each director; Article 17.8 provided that the accidental omission to give notice does not invalidate proceedings at a meeting. The Reverse Vesting Agreement gave Acel the right to compel repurchase of any of the founders' shares.

Reasoning and analysis

Justice Wilson found that Michael had received notice of the March 11, 2025 board meeting (which was sent by email in the ordinary course), but that an agenda had been prepared in advance and circulated to all directors except Michael — a deliberate exclusion, not an inadvertent omission. That meeting, which resulted in resolutions to revoke Michael and Loretta's signing authority over Acel's bank accounts, to authorize termination of Michael's employment agreement dated January 1, 2023, and to remove Michael as a director of Acel's Chinese subsidiaries, was found to have been validly held, though its primary purpose — changing the bank signing authority — proved ineffective because CIBC required a 75 percent shareholders' resolution to effect the change.

The subsequent directors' meetings of April 23 and 24, 2025 were conducted entirely without notice to Michael, who remained a sitting director. The court found this was deliberate: the other directors knew that Michael, through AtlasHub, held the power to appoint four of the five directors and could have replaced them if he became aware of what was transpiring. At the April 23 meeting, the board resolved to terminate Michael from his position as executive chairman, and also resolved to repurchase 19,444,444 of AtlasHub's shares pursuant to the Reverse Vesting Agreement for a total price of $58,333. At the April 24 meeting, the board resolved to issue approximately 106 million common shares to Anthony at $0.00000001 per share for aggregate gross proceeds of $1.06. These two sets of resolutions were collectively referred to as the "Impugned Resolutions." Anthony acknowledged during cross-examination that the shares were issued on a "temporary basis" as a requirement of Tau. Following the April 24 share issuance, AtlasHub was no longer the majority common shareholder, and a May 14, 2025 shareholders' special general meeting removed Michael as a director — passed by virtue of Anthony's newly issued shares, over Michael's vote against.

Justice Wilson applied the common law principle, confirmed in Cholakis v. Cholakis, 2006 MBQB 91, and Anderson Lumber Co. v. Cdn. Conifer Ltd., 1977 CanLII 1665 (A.B.C.A.), that a resolution purported to be passed at a directors' meeting of which a single director has no notice is invalid. The Impugned Resolutions were therefore invalid at common law.

Turning to s. 229, the court applied the two-step framework from Phaneuf v. 0896459 B.C. Ltd., 2022 BCSC 1706: first, whether there is a "corporate mistake" within the meaning of s. 229(1); and second, whether the court should exercise its discretion to grant corrective relief, having regard to the gravity of the defect and the equities. Even if the deliberate exclusion of Michael could constitute a "corporate mistake," Justice Wilson declined to cure the Impugned Resolutions under s. 229. The defect was grave — Anthony and the other directors had flagrantly ignored the notice requirements of the Articles to covertly remove Michael's and AtlasHub's influence in Acel. The court also considered that AtlasHub, as majority shareholder, was entitled to expect that the company would be operated in accordance with its constating documents, and found that Michael's obstructive conduct with Acel's funds, while problematic, could not justify wholesale cancellation of AtlasHub's rights as majority shareholder.

On s. 228, the court distinguished the Park v. FinancialCAD Corporation, 2008 BCSC 353, decision (which was under the Canada Business Corporations Act, RSC 1985, c. C-44, a statute without a provision equivalent to s. 229 of the BCA), finding that s. 228 of the BCA does give the court the authority to grant the declaratory and corrective relief AtlasHub sought. The court found there had been a clear contravention of the Articles, and that orders under s. 228 were appropriate complementary enforcement measures to correct the consequences of the conduct that had contravened the Articles.

Ruling and overall outcome

AtlasHub was the successful party. Justice Wilson granted the following orders: (a) a declaration that the April 23, 2025 resolution terminating Michael Liu as executive chairman is of no force and effect; (b) an order requiring Acel to return the 19,444,444 shares acquired from AtlasHub under the Reverse Vesting Agreement, with Acel's corporate records corrected accordingly; (c) a declaration that the April 24, 2025 resolution issuing 106 million common shares to Anthony Liu is of no force and effect; (d) an order requiring Acel to cancel those shares; (e) an order setting aside the May 3, 2025 board resolution to hold a special shareholders' meeting on May 14, 2025, as not a valid resolution; (f) a declaration that the May 14, 2025 shareholders' resolution removing Michael Liu as a director is of no force and effect; and (g) an order directing Acel to hold an annual general meeting under s. 186 of the BCA, with the condition that until such meeting is held, Acel is restrained from issuing any further shares without AtlasHub's consent or further leave of the court. Anthony Liu's cross-petition was dismissed. AtlasHub was awarded its costs. No specific monetary quantum of costs was set out in the judgment.