About Directors

David van Moorsel

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What are Directors?

Directors are appointed by the shareholders and control the corporation. They owe a fiduciary duty (a duty of utmost good faith) to the corporation and make decisions such as:

  • when and in what amounts to pay shareholders;
  • whether to obtain financing;
  • whether to hire new employees;
  • whether to enter into a new lease or purchase agreement.

By default, directors also have general signing authority on behalf of the corporation.

A director’s rights and duties can be modified or changed by resolution, unanimous shareholders agreement, or by providing to the contrary in the corporation’s by-laws, they can also vary by jurisdiction.

Who can be a director?

In order to qualify as a director, an individual must:

  • be at least 18 years of age;
  • not be subject to a finding of mental incapacity in any jurisdiction;
  • not be bankrupt.

In some jurisdictions, a certain number of the directors must also be Canadian residents. In Alberta for example, at least 1/4 of all directors must be residents of Canada.

Can directors be liable for acts or omissions of the corporation?

Directors can be liable for decisions made while acting as a director, as well as for acts or omissions of the Corporation in certain circumstances.

Examples of potential causes of liability for directors include:

  • failing to deduct/withhold and remit certain statutory deductions from employees for wages and benefits;
  • the corporation failing to remit certain taxes required by the Excise Tax Act(Canada);
  • falsification of records, or filing incorrect reports, returns or notices required by law;
  • authorizing the payment of dividends or the redemption of shares where such dividends or redemption would result in the corporation being insolvent or unable to pay its liabilities as they become due;
  • failure to pay wages to employees; and
  • otherwise carrying out their duties as a director in an improper manner.

Can directors be paid for their services?

Directors can be paid for services rendered as a director. If you are considering making payments to a director, we strongly recommend that you seek assistance from an accountant or financial advisor first, since the manner in which payments are made to shareholders and directors can have a significant impact on the amount of taxes payable.


If you would like more information with respect to the potential liabilities that may arise as a result of acting as a director or officer of a corporation or would like a referral for an accountant, please contact a business lawyer with Twin River Law LLP.

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This article contains general information, NOT LEGAL ADVICE.
If you’d like legal advice from a lawyer, incorporate with us or contact a lawyer with Twin River Law LLP to request a consultation.