The Role of Boards, Advisory
Panels and Service Providers
MaRS Entrepreneurship 101
Craig C. Thorburn
Blake, Cassels & Graydon LLP
March 25, 2009

The Corporate Model
 Corporation
→ Separate legal person
→ Limited liability
 Triad
→ Shareholders
→ Directors
→ Officers
3

Shareholders
 Shareholders
→ Election of Directors (also removal)
→ Appointment of Auditors
→ Entitlement to receive Dividends
→ Proceeds on Winding up
→ Approval of major changes
• sale of all or substantially all assets
• change of name
• change of articles of incorporation
4

Directors
 Duty to Manage
→ “the directors shall manage, or supervise the management of,
the business and affairs of the corporation”
 Fiduciary Duty (Duty of Care)
→ Every director of a corporation in exercising powers and duties
shall
• “act honestly and in good faith with a view to the best
interests of the corporation”
• “exercise the care, diligence and skill that a reasonably
prudent person would exercise in comparable circumstances”
5

Director Liabilities
 Directors are “jointly and severally” liable to restore to the corporation
any amounts distributed or paid and not otherwise recovered by the
corporation in certain circumstances for:
→ a purchase or redemption of shares
→ payment of a dividend
→ payment of an indemnity
 Directors also liable in certain circumstances for:
→ unpaid wages of employees
→ unpaid income tax remittances
→ failure to make withholding tax payments
→ unpaid PST and GST
→ environmental liabilities
→ criminal offences
6

Director Protections
 Due Diligence
 Reliance on expert reports
 D&O Insurance
7

Officers
 Same duty of care as directors
 Few statutory liabilities
 Risk/Reward Mismatch
8

Advisory Panels
Expertise for corporation

No liability for panel members

Diversity of skills and views

Don’t select people in your own image

Angels

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Service Providers
Accountants

Lawyers

Investment bankers

Advertising agencies

MaRS

→ Business Mentorship and Entrepreneurship Program
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