What Is Your Liability As A Director?

The following sets out the general personal liability of a Corporate director or officer, but is only intended as a general guide and as such, if you have any questions concerning the information herewith, do not hesitate to contact your private legal counsel.

If you are a director of a corporation that is an employer or agent, you must make sure that the corporation remits certain amounts to the Ministère du Revenu. If it fails to do so while you are a director of the corporation, you could be required to pay the amounts concerned, as well as any related interest charges and penalties.

This means that you could be personally liable for amounts that the corporation

• failed to deduct, withhold or collect under a tax law;
• deducted, withheld or collected under a tax law, but failed to remit to the Ministère du Revenu; or
• failed to remit to the Ministère as employer contributions.

You may be held personally liable in cases where the Ministère is unable to recover the amounts from the corporation or where the corporation goes bankrupt.

Before sending you a notice of assessment for amounts not paid by the corporation, the Ministère must first

• ensure that the corporation has gone bankrupt; or
• obtain a judgment against the corporation that remains unpaid because seizure of the corporation's property does not allow the Ministère to recover the full amount owing.

The amounts that may be recovered from a director are therefore limited to the amounts not paid by the corporation.

When are you not held liable as a director?

There are three situations in which you may not be held liable:

• You acted with reasonable care, diligence and skill under the circumstances.
• Under the circumstances, you could not have been aware of the omission
• It has been at least two years since you were a director of the corporation

The law makes no distinction between types of directors, so that, even if you were a passive director, your lack of involvement may not necessarily absolve you from personal liability.

As a director of a corporation, you may be held personally liable. If you are, or cease to be, a director of a corporation, make sure that all required procedures have been followed and that this is substantiated in official documents.