Another significant potential area of personal liability for directors and officers of business corporations in Ontario to consider arises as a result of 200+ laws of all levels of government that have provisions imposing personal liability in prescribed situations. Speaking broadly, these laws fall into several categories, including:
- Taxation and revenue laws such as certain types of taxes collected by a business and withholdings undertaken by employers on behalf of government;
- Employment laws such as obligations pertaining to wages and severance;
- Environmental protection and public health & safety laws such as penalties for allowing or directing a breach of the specific requirements of a law; and
- Business and securities legislation such as duties on directors and officers as they relate to actions of a corporation that impact upon its shareholders and/or creditors.
Examples of ways in which personal liability may be attributed to a director or officer under these laws include:
- Making directors and/or officers personally liable for certain financial obligations of a corporation such as collecting and remitting taxes or relating to certain entitlements of employees under employment laws; and
- Quasi-criminal offences which may be committed when a corporation's directors or officers are negligent or fail to discharge their legal duties.
These are just a few of the reasons why prudent directors and officers of corporations in Ontario should take steps to protect against potential personal liabilities that arise by virtue of their position.
The content contained in this blog is intended to provide information about the subject matter and is not intended as legal advice. If you would like further information or advice please contact the author.