Recently there have been more and more articles on the under
representation of women and minorities as directors in boardrooms. For e.g. see http://www.theglobeandmail.com/report-on-business/careers/management/few-women-in-leadership-roles-in-toronto-study-finds/article2362298/
. The Globe and Mail cites a study from Ryerson University’s Diversity group
which found only 17% of the Greater Toronto Area boardrooms had female
representatives. Now before any of my
fellow sisters decide to plunge into the board room arena I would like to offer
a few words of caution. These words of
caution may temper one’s enthusiasm in accepting a directorship offer but the
old adage of it is better to be safe than sorry applies here.
When accepting a directorship please note that where a corporation has failed to deduct, withhold taxes or fail to remit source deductions under the Income Tax Act RSC 1985, c. 1 (5th Supp.), as amended, the Excise Tax Act RSC 1985, c. E-15, as amended, the Employment Insurance Act SC 1996, c. 23 as amended, the Canada Pension Plan Act RSC 1985, c. C-8, as amended and the Ontario Retail Sales Tax Act RSO 1990, c. R.31, as amended, the directors of such a corporation will be personally liable for the unpaid and unremitted amount. One does not have to formally have accepted a directorship offer. These penalizing provisions will also apply to an officer of the corporation or anyone who manages the corporation and holds him or herself out as a director. Also note that the government does not have to attempt collection from the corporation first. Case law has established that the Government can collect from the directors before attempting collection from the corporation – see Seng Chin Siow (2011 TCC 301).
When accepting a directorship please note that where a corporation has failed to deduct, withhold taxes or fail to remit source deductions under the Income Tax Act RSC 1985, c. 1 (5th Supp.), as amended, the Excise Tax Act RSC 1985, c. E-15, as amended, the Employment Insurance Act SC 1996, c. 23 as amended, the Canada Pension Plan Act RSC 1985, c. C-8, as amended and the Ontario Retail Sales Tax Act RSO 1990, c. R.31, as amended, the directors of such a corporation will be personally liable for the unpaid and unremitted amount. One does not have to formally have accepted a directorship offer. These penalizing provisions will also apply to an officer of the corporation or anyone who manages the corporation and holds him or herself out as a director. Also note that the government does not have to attempt collection from the corporation first. Case law has established that the Government can collect from the directors before attempting collection from the corporation – see Seng Chin Siow (2011 TCC 301).
Dear reader you may dispute what I have just stated by
stating that director liability insurance will protect you as director from any
collection process. This may be so or it
may not be where for e.g. there was fraud committed by the corporation when it
applied for director liability insurance.
As such when accepting a directorship it is advisable to tread carefully
and to be fully cognizant of the exposure of your personal assets to potential
collection activity at the federal and at the provincial level.
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