Director’s Liability

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.