About Directors

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, and whether to enter into new agreements.

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

Who Can Be a Director?

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 directors must also be Canadian residents.

Can Directors Be Liable?

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 include:

• Failing to deduct/withhold and remit certain statutory deductions from employees
• The corporation failing to remit certain taxes required by the Excise Tax Act
• Falsification of records or filing incorrect reports
• Authorizing improper payment of dividends or redemption of shares
• Failure to pay wages to employees
• Otherwise carrying out their duties in an improper manner

Can Directors Be Paid?

Directors can be paid for services rendered. We strongly recommend seeking assistance from an accountant or financial advisor first, since the manner in which payments are made to directors can have a significant impact on taxes payable.