Acting as a director of a corporation requires careful oversight of the business, and effectively resigning from that position may require just as much caution. The Federal Court of Appeal made this clear in a 2016 decision on director’s liability.
The court held that an effective resignation must be properly written, fully completed, dated, signed and delivered. If not, a director may be liable for debts, obligations or actions of the corporation.
This may come as a surprise to you.
Writing a resignation letter and telling others that you no longer intend to act as a director may not sound that far off from a complete resignation.
Unfortunately, the Supreme Court of Canada disagrees and has recently refused to hear an appeal on the subject. It is therefore wise for any director to remember they are vulnerable to liability in the eyes of the law until they submit a complete and effective resignation.
Signing an undated document and leaving it on your desk will not suffice. Date it and deliver it to the corporation. When it comes to liability, you can never be too careful.
For more information on director’s responsibilities and liability, please contact us.
Remy Rosinski, Student-at-Law