Another significant potential area of personal liability for directors and officers of business corporations in Ontario to consider arises as a result of 200+ laws of all levels of government that have provisions imposing personal liability in prescribed situations. Speaking broadly, these laws fall into several categories, including:
- Taxation and revenue laws such as certain types of taxes collected by a business and withholdings undertaken by employers on behalf of government;
- Employment laws such as obligations pertaining to wages and severance;
- Environmental protection and public health & safety laws such as penalties for allowing or directing a breach of the specific requirements of a law; and
- Business and securities legislation such as duties on directors and officers as they relate to actions of a corporation that impact upon its shareholders and/or creditors.
Examples of ways in which personal liability may be attributed to a director or officer under these laws include:
- Making directors and/or officers personally liable for certain financial obligations of a corporation such as collecting and remitting taxes or relating to certain entitlements of employees under employment laws; and
- Quasi-criminal offences which may be committed when a corporation's directors or officers are negligent or fail to discharge their legal duties.
These are just a few of the reasons why prudent directors and officers of corporations in Ontario should take steps to protect against potential personal liabilities that arise by virtue of their position.
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