Offices in Ottawa and Perth
(613) 722-1500

CONTACT US (613) 722-1500

Other Sources of Liabilities for Directors

Other Sources of Liabilities for Directors

Mann Lawyers

Posted December 5, 2018

In a recent blog, I presented the duty of care and the fiduciary duty of directors as a potential source of liabilities for them. This blog will cover other sources of liabilities for directors.

Directors of a corporation are jointly and severally liable with the corporation for certain tax arrears of a corporation, a corporation’s failure to withhold or remit certain amounts on account of employee tax/pensions/benefits, failure to withhold or remit certain amounts on account of HST or Excise Tax the corporation’s penalties for failing to file annual returns with the Provincial or federal authority responsible to receive such declaration, up to six (6) months of unpaid wages owed to employees of the corporation, the costs associated with some environmental offences committed by the corporation, and any payments made to shareholders when the corporation is nearing insolvency. Moreover, directors may attract personal liability for tortious conduct of the corporation: “Where those actions are themselves tortious or exhibit a separate identity or interest from that of the corporation so as to make the act or conduct complained of their own, they may well attract personal liability” (see Blacklaws v. Morrow, 2000 ABCA 175 at para.  41).

Directors may also be liable when they take on a direct supervisory role. As an example, in Nielsen Estate v Epton (Nielsen Estate v. Upton, 2006 ABCA 382, affirming 2006 ABQB 21), the plaintiff was crushed in the course of lifting a heavy industrial load with a crane. The director, Epton, had supervised the fabrication, transportation and installation of the structures from a work-site office. The employer’s other director and shareholder was responsible for office management and sales. The director’s failure to attend to the duties that were assigned to him attracted personal liability.

As a final note, please be advised that directors are also personally liable for any debts of the corporation that they personally guarantee.  We therefore advise an abundance of caution before you decide to personally guarantee any corporate debt.

Directors may consider reducing this potential liability by having the corporation purchase directors’ errors and omissions insurance on their behalf. This insurance may be difficult and costly to maintain. It is recommended that the directors take care to ensure that all of the corporation’s payments are made on time, separate funds are created to hold any remittances or employee pensions/benefits, the corporation complies with all environmental laws and regulations, and the corporation is in good financial standing prior to declaring any dividends or approving any share redemptions/repurchases. 

Should you have any further questions about director liability, I would be glad to provide you with further information.

This blog post was written by Robert P. Bissonnette, a member of the Business Law team, who is licensed in both Ontario and Quebec.  Robert can be reached at 613-369-0365 or at

More Resources

Blog |
Family Law


Posted November 29, 2022

When a Court is charged with structuring a parenting arrangement leading up to trial, the bench is often faced with conflicting and untested evidence about[...]
Blog |
Employment, Labour, and Human Rights


Posted November 24, 2022

The Employment Standards Act, 2000, “ESA” has been amended to require that Ontario employers create an electronic monitoring policy per the requirements of Bill 88,[...]
Blog |
Commercial Litigation


Posted November 22, 2022

In Ontario, the Small Claims Court offers parties a more expedient, cost-effective process for litigating smaller value claims, in comparison to the processes of the[...]
Blog |
Business Law


Posted November 14, 2022

Private corporations governed under the Canada Business Corporations Act (“CBCA”) will soon be required to report certain information about individuals with significant control directly to[...]
Blog |
Environmental Law


Posted November 8, 2022

Biodiversity is immensely important to our ecosystem.  Species at risk face considerable threat to their continued existence, much of which results from human harm to[...]
Blog |
Estate Litigation, Wills, Trusts and Estates


Posted November 1, 2022

Disputes over funeral and burial arrangements can arise after the death of a loved one. These disputes may involve disagreements over the funeral arrangements, including[...]

Subscribe to Our Newsletter

"*" indicates required fields

This field is for validation purposes and should be left unchanged.