What are the Potential Liability of Officers and Directors

Question

What are the Potential Liability of Officers and Directors?

Answer 1

Officers and Directors may be liable for their actions in relation to the corporation under tort law, contract law, regulatory law, and criminal law. While some courts have held that Officers and Directors are not personally liable for tortuous actions as long as they were acting in “furtherance of their duties to the corporation and their conduct was justifiable,” recent Ontario case law seems “to suggest that Officers and Directors will almost always be dependable for their own tortuous conduct even if they were acting in the best interests of the corporation.”

Contract law generally puts Officers and Directors in the position of agents and makes the corporation liable to the third party. Directors may also face statutory penalties (including imprisonment) and fines for unpaid taxes as well as under environmental protection and other regulatory schemes.