- Directors must manage or supervise the management of the corporation’s activities and affairs.
- Volunteer and unpaid status does not remove the duties or the exposure.
- Personal liability attaches to certain obligations, including unpaid wages and unremitted amounts.
- Recording dissent in the minutes is the cheapest protection available.
The duties
ONCA requires directors to manage or supervise the management of the activities and affairs of the corporation. That is an active obligation, not a ceremonial one.
Directors owe a duty of care, which is assessed objectively, and a duty of loyalty requiring them to act honestly and in good faith in the corporation’s best interests.
Where the corporation is a registered charity, directors also carry obligations regarding charitable purposes and the proper use of charitable property.
Where personal liability arises
Unpaid wages and vacation pay owed to employees, in defined circumstances.
Unremitted source deductions and HST, with interest and penalties. This is the exposure that most often surprises volunteer directors of small organisations.
Breach of duty, including self-dealing and undisclosed conflicts.
Improper use of restricted funds, where charitable property has been applied contrary to its terms.
None of these is softened by the fact that the director received nothing for serving.
Practical protection
Attend and read. A director who does not attend is not protected by absence; they are less informed and equally responsible.
Ask about remittances. Whether source deductions and HST are current is a question every board should be asking, and many do not.
Record dissent. A director who opposes a decision should have that recorded in the minutes. It costs nothing at the time and is frequently the difference later.
Check indemnification and insurance. Many small non-profits carry neither, and their directors do not know it. It is a question worth asking on joining rather than on leaving.
Before joining a board
Ask to see the by-laws, the most recent financial statements, and confirmation that filings and remittances are current.
Ask whether directors’ and officers’ insurance is in place and what it covers.
A board that cannot answer those questions is telling you something useful about what you would be taking on.
Common questions
Does being a volunteer reduce liability?
No. The duties and statutory exposures attach to the office rather than to whether it is paid.
Can the organisation indemnify us?
Within statutory limits, yes, and many by-laws provide for it. Indemnification is only as good as the organisation’s ability to pay.
What if I disagree with a decision?
Record your dissent in the minutes. It is the clearest protection available and it is free.
How do I resign?
By written resignation delivered to the corporation, with records updated. It ends future exposure but not liability for the period served.
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