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This article is an excerpt of the Canada Chapter of International Liability of Corporate Directors, 2nd edition, published by Juris Publishing in February 2013. This excerpt excludes numerous aspects of the full chapter, particularly in reference to offering corporations, national corporate reporting, the supervisory role of the securities commissions, insider trading, prospectus violations, director loans and directors’ and officers’ liability insurance and indemnification of officers and directors. Further, some sections have been abridged. The full article should be consulted for the omitted aspects and for a more complete analysis of the applicable law. This article is not legal advice and is intended solely as information. Further information can be obtained from the authors.
In Canada, there is a large body of statutory and common law which provides guidance about the standards of conduct expected from directors and attaches personal liability for failing to meet those standards. Directors now owe expanded duties to shareholders, employees, creditors, and other stakeholders and are increasingly being held personally responsible for the corporation’s conduct. Liability attaches under the Canada Business Corporations Act (CBCA), and under provincial corporations acts, most of which are similar to the Ontario Business Corporations Act (OBCA). This article deals only with liabilities under business corporations.