Peter’s Blog

Often the use of a Corporate Lawyer comes about as a result of challenges in business situations. Peter’s blog has been created to demonstrate the range of business situations that require the introduction of a corporate lawyer early in the process to prevent the often complex problems businesses find themselves in. Short succinct examples on asset protection, estate planning, succession planning and a variety of other matters will be addressed interspersed with some fun tongue and cheek responses to the media on issues of corporate law. Enjoy!

Updated Warnings to Directors of Corporations, Past and Present

Two recent cases in the Federal Court of Canada highlight the perils for Directors of Corporations, even as a Past Director.

As you may know, under the Income Tax Act (Canada), Directors have personal liability for unremitted withholdings from employees’ salaries (the portion of salaries deducted from paycheques for employee taxes, UIC and CPP). In addition, under the Excise Tax Act (HST), Directors are personally liable for unpaid Corporate collected HST.

For both Tax Acts, the limitation on that liability usually has been for the term the Director was a Director. But evidence of when a Director is no longer a Director has historically been determined by (or relied upon by CRA) to be what is filed with the Government of Ontario under the Corporations Information Act (Ontario) at the Central Registry, sometimes referred to as a “Form 1” filing (required to be filed annually by every Corporation to reflect current Officers and Directors)

The 2 new cases turn that on its head, relying, in both cases on the provisions of the Business Corporations Act (Ontario), particularly S. 121:

121 (2) A resignation of a director becomes effective at the time a written resignation is received by the corporation or at the time specified in the resignation, whichever is later.

The Court determined that only a letter of resignation, signed, even whether or not recorded in the Corporation’s Minute Book, is the only determining factor as to a Director’s liability.


If you wish to avoid personal liability, you must actually have signed a resignation….and keep it for future use.

While this may sound unduly strict, it’s the law. And in the case of many of our readers, there are those who have passed their Businesses on to others, sold their Company or simply resigned from a Board of Directors to retire. Check your exposure now.

Note that in many cases, a Director might resign, even by a letter, but the Recipient of that letter (the President of the Company or a “titular” Secretary) may not have entered that all-important letter of resignation into the Company records, or junked it as an unnecessary piece of paper or redundant because “everyone knows Charles resigned/retired”. No good

(Canada v. Chriss, 2016 FCA 236,403 D.L.R. (4th) 569; and Cliff v. Her Majesty The Queen, FCA Docket A-266-19)