Actions against Directors may be brought by:

(1) Members: if the Director adopts a course that causes the corporation to lose money or assets or both, the members may ask the court to restrain the Director.

(2) Outsiders: if the Director acts outside the scope of given authority, the Director may be personally liable.

(3) the Corporation: if the corporation suffers a loss as a result of the Director=s actions, the corporation may have a cause of action.


STATUTORY LIABILITY

The Ontario Corporations Act
- s. 81: provides that Directors of a corporation are jointly and severally liable to the employees for not more than 6 months= wages and 12 months= vacation pay.
- technical offences (ss. 303B305, 302, 310, 331, 332).

The Canada Corporations Act
- Directors can be liable for six months= wages, etc.
- technical offences (ss. 27, 99, 133, 149, 150).

Income Tax Act
- personal liability on the Directors of a corporation if the corporation fails to deduct, withhold, or remit taxes.

Unemployment Insurance Act and Pension Legislation
- The Director is liable if the corporation does not deduct or remit (1) unemployment insurance premiums, or (2) appropriate amounts under the Canada Pension Plan.

Environmental Protection Act and Ontario Water Resources Act
- legal duty to take all reasonable care.
Occupational Health and Safety Act

- There is a positive legal duty on Directors to take all reasonable care to ensure that the corporation complies with the act and its regulations.

Common Law Standards
- Each Director is only required to exercise such a degree of skill as could reasonably be expected of a person having the same degree of knowledge and experience as that director.

Fiduciary Duty to the Corporation / Conflict of Interest
- Each Director is legally obligated to act in good faith and in the best interests of the organization.
- Each Director must declare a conflict of interest when it exists.
- Directors do not and should not represent any part of the corporation or its members.

Diligence
- Each Director is expected to be aware of all aspects of the operation of the corporation.

DISCLAIMER: This fact sheet is intended for general information purposes only. Before making decisions based on your specific situation it is advisable to consult a lawyer.