By John Cockburn, Partner
You have an acquaintance, who lives in the USA or lives off shore and she has started doing business in Ontario, having incorporated an Ontario corporation. She has been told by her lawyer that she needs a Canadian resident director and that by entering into a “Unanimous Shareholders Agreement”, thereby downloading all responsibility for the management of the company to its shareholders, the Canadian resident “Accommodating Director” will be protected from all liabilities as a director.
WRONG!
The Unanimous Shareholder Agreement (Section 108 of the Ontario Business Corporations Act - the OBCA) will only protect a director from certain Ontario statutory liability and affords such a director **no protection** from liability under the Income Tax Act for payroll deductions not remitted, nor for HST, and no protection against a claim by employees for vacation pay.
CRA (the Canada Revenue Agency) will go after *you* first and leave it to you to seek indemnity from your foreign acquaintance – Good Luck with that!