WHAT IS A BOARD OF DIRECTORS?
A Board of Directors, commonly referred to as 'The Board', is the governing body of the corporation. It is common for a private corporation to have a board with a single director.
WHAT IS A DIRECTOR?
A Director is a member of a Board of Directors. This individual is duly elected or appointed by the shareholders.
CAN DIRECTORS BE HELD PERSONALLY LIABLE?
Absolutely! Contact the C2 Global Law professionals prior to accepting a board appointment. It is very important that you have a clear understanding of your responsibilities and liabilities because board indemnity may not be sufficient and ignorance is not a defence.
WHAT ARE THE POTENTIAL LEGAL LIABILITIES OF A DIRECTOR?
There are several areas in which directors many be liable. These include:
- Unpaid employee wages, vacation pay, payroll taxes, termination pay and severance
- Director liability for misrepresentation to the general public
- Unpaid income taxes, sales taxes, GST/HST, workmen's compensation
- Contracts – a director may have entered into a contract without proper authorization or on behalf on a non-existent corporation
- Tort – the directors' own actions are tortious
- Breach of fiduciary duty
- Breach of trustee duties – where the corporation is a charity or directors deal with assets that are impressed with a trust
- Common law liabilities - directors acting without proper corporate authority
- Statutory liabilities – there are numerous obligations imposed on directors under federal and provincial legislation
- Government reporting requirements
- Membership list disclosure provisions
- Winding-up procedures
There has been expansion in statutory liabilities and a broadening of fiduciary duties imposed on corporate directors who can face both civil and criminal liability. Minimize your risk and consult with the C2 Global Law professionals prior to accepting a board appointment.