When Trust Isn't Enough: The Governance Lesson in the McCain Family Feud

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Eleanor McCain, daughter of McCain Foods co-founder Wallace McCain, is suing her own family. Her statement of claim, filed in the Court of King's Bench in Moncton, alleges the family holding company built a two-tier board structure that makes it, in the filing's words, "practically impossible for any shareholder to sell their shares to a purchaser outside of the McCain family," leaving her "trapped" in an 8.72% stake she says is worth hundreds of millions more than the company's buyout offer, according to CBC News . None of the allegations have been tested in court, and the company says they are without merit. But the story carries a real warning for every Punjabi-Canadian family behind a trucking fleet, a pharmacy chain, or a construction company: even a business built by two immigrant brothers in 1957 and grown into a global food empire with $16 billion a year in sales , with a deliberate board structure, can end up litigating exactly what that structure was meant to prevent once ownership spreads across 55 family shareholders. If governance this developed can still end up in court, it's worth asking what's actually written down at ours.

The scale of the blind spot

Family-owned businesses aren't a side note in the Canadian economy — they're the main event. They make up 63.1% of all private-sector firms , generate 48.9% of private-sector GDP (about $574.6 billion), and employ 6.9 million Canadians, according to Family Enterprise Canada. Yet the same research found only about a third have a board of directors (34%), a written shareholders' agreement (31%), or hold regular family meetings (30%). For a sector this large, that's a thin layer of formal structure sitting under an enormous amount of value.

For many first-generation Punjabi-Canadian founders, that gap isn't neglect — it's design. The business was built on trust, long hours, and a handshake, and putting things "on paper" can feel like it questions that trust. What the McCain case illustrates is closer to the opposite: businesses without a clear, current, mutually understood agreement are the ones most likely to end up settling family disagreements in a courtroom instead of around a kitchen table.

What "informal" actually costs

Ontario courts have a broad tool called the oppression remedy, and litigators who work these files see a consistent pattern. As one Toronto litigator put it in a Lexpert analysis of family business disputes , family companies "tend to have fewer owners, take a more informal approach to management, and are less likely to operate under a shareholders' agreement" than other businesses — and when conflict hits, the absence of an agreed roadmap for valuation, exit, and dispute resolution routinely forces the outcome into a judge's hands. The same article points to the Libfeld family's Conservatory Group, a real estate business valued between $2.5 and $4 billion, where four brothers never adopted a shareholders' or partnership agreement; the eventual dispute required a 21-day trial before a court ordered the company wound up and sold.

The upside of formalizing is measurable, not just theoretical. A BDC study found only 6% of Canadian SMEs have access to an advisory board — but 86% of businesses that use one say it has had a significant impact, and SMEs with an advisory board consistently outperform those without one financially. An advisory board doesn't need to be a big production. For many owner-operators, it starts with two or three trusted outside voices — an accountant, a lawyer, a peer from another industry — meeting quarterly and asking the questions a family member won't.

Four documents worth writing down

Professionalizing doesn't mean bringing in a big-city board or diluting family control. PwC's 2023 Family Business Survey found that among Canadian family enterprises, half now have a shareholders' agreement in place (up from 47% in 2021), while just 30% have a family constitution or protocol and only 20% have a shared family capital strategy. Notably, businesses with a clear purpose and values statement written down and communicated to the family reported meaningfully higher trust — yet only 43% have taken that step.

Four documents tend to matter most, roughly in order of urgency: a shareholders' or partnership agreement spelling out valuation method, buy-sell terms, and what happens on death, disability, or exit; a family employment policy setting out who can join the business, on what terms, and who they report to; a simple governance calendar — quarterly ownership meetings, an annual valuation, a standing agenda — so decisions aren't made ad hoc; and a one-page statement of family values and purpose that everyone signs, which PwC's data directly ties to higher reported trust and growth.

None of this requires abandoning the informal warmth that makes a family business what it is. It means writing down, while relationships are good, what everyone currently just assumes — because assumptions are exactly what unravel, whether in a $16-billion-a-year food empire or a much smaller, unreported dispute.

Key takeaways

Two-thirds of Canadian family businesses are missing a board, a shareholders' agreement, or both. The businesses that formalize these structures measurably outperform those that don't. And even a business with a deliberate, formal board structure, like McCain Foods, can still end up in court once that very structure becomes the thing being litigated, as ownership spreads across generations. Governance doesn't guarantee peace. Its absence just about guarantees a fight.

We see this pattern often among Punjabi-Canadian business owners, many of whom are first-generation founders reaching the exact moment their business has outgrown an informal structure. If you're weighing when — and how — to formalize, it's worth having that conversation with peers who've already been through it. Chamber membership connects you with that network, along with introductions to the accountants, lawyers, and advisors who do this work every day. Explore what membership looks like for your business.

This article is for general information purposes only and does not constitute legal, financial, or professional advice. Business owners should consult a qualified lawyer or advisor before adopting or amending governance documents.

Sources

CBC News — "McCain daughter says she's 'trapped' in family company" (Apr 10, 2026)

Family Enterprise Canada — "Statistics on Canadian Family Enterprise"

Lexpert — "Inside the Complex World of Corporate Oppression in Family Businesses"

BDC — "Advisory Boards: An Untapped Resource for Businesses"

PwC Canada — "Family Business Survey 2023—Canadian insights"