Liability of directors and board members

One of the main advantages of operating a business as a "company" is to limit the liability of its shareholders to their contribution to share capital. However, this limitation of liability does not extend to shareholders who act as directors of the company. When they are at fault, their acts and omissions arising in that capacity expose them to civil responsibility.

Laws governing "companies", which are mainly the Business Corporations Act in Quebec and the Canada Business Corporations Act impose rights and duties to Board members. The Civil Code of Québec also imposes specific duties, including the obligation to act with prudence and diligence. Various laws may also incur liability.

Moreover, the "separate legal personality" of the company may simply be discarded in some cases (exceptional) to allow actions against individuals who control it. This is the situation of business managers who use their companies as a cover to violate public policy rules.

The facts and circumstances of each situation must be examined to gauge the risks or recommend a course of action. Most lawyers working with clients who are held liable wonder why they haven't been consulted earlier. Prior consultation is a wiser and cheaper option. We can guide you in many ways.

In this practice area, our team meets your needs in several ways, including:

• Advice relating to duty of care, diligence, honesty and loyalty of directors;
• Advice on the liability of directors in areas such as conflicts of interest, employee wages and benefits, loans to shareholders, declaration of dividends, treatment of minority shareholders, as well as the buy-back or redemption of shares;
• Advice on documentation by the directors of their dissent with respect to collective decisions of the Board;
• Advice on lifting the corporate veil and direct remedy against the companies' managers;
• Settlement agreements in matters related to civil responsibility of directors and managers;
• Representation in court in disputes relating to the civil responsibility of directors and managers.