The Rural Voice, 1993-06, Page 16FARMGATES
FEEDERS
FEED WAGONS
Rugged Dependable
Reliable
2 models • 1" square tubing
• 1 1/4" square tubing
k3 .�
7' x 8' Single Bale Feeder
for 4' and 5' round bales
Larger sizes available
u
1,I
Econo Model Feed Wagon
• Quick hitch tongue
• Pivoting front axle
• Priced very reasonable
Call for your nearest dealer
or buy direct from
OWEN MARTIN
MANUFACTURING
Hawkesville, Ontario
519-699-4144
"95 Dealers Across Ontario"
12 THE RURAL VOICE
Agrilaw
Who would be a director?
What obligations does a director
of a farm corporation assume upon
becoming a director? To whom are
these obligations owed? What risk
is being
assumed by a
director which
may arise from
a breach of such
obligations?
The directors
of all corpora-
tions owe a
"duty" to both
the corporation
itself (giving
rise to "direct
liabilities"), and
to persons with
whom the
corporation
deals ("imputed liabilities"). A
"duty" is a responsibility which
one person owes to another which
the law will recognize and enforce.
A breach of such duty, a failure
to meet the responsibility, may
give rise to harm and that harm
may be compensated by a court
by, for example, an award of
damages.
To the corporation itself, a
director owes a duty which is of
fiduciary nature, a very high
standard. The duty is contained in
the Ontario Business Corporations
Act ("OBCA"), and requires a
director in exercising his or her
powers to act honestly and in good
faith with a view to the best
interests of the corporation and to
exercise the care, diligence and skill
that a reasonably prudent person
would exercise in comparable
circumstances.
The fiduciary duty owed by a
director to the corporation may be
enforced by the corporation itself
suing the director because the
director did something which
harmed the corporation, such as by
diverting to him or herself a
business opportunity which should
have been exploited by the
corporation. Alternatively, the duty
What
obligations
does a
director
of a
farm
corporation
assume?
may be enforced by a creditor,
shareholder or fellow director of the
corporation suing the director
because the director caused,
contributed to, authorized or
acquiesced in a course of conduct
which harmed the corporation.
The second broad category of
duties, which gives rise to "imputed
liabilities", are those duties owed by
the director to persons with whom
the corporation deals. There are
now in excess of 100 statutes, both
federal and provincial, which
contain provisions creating such
potential liability.
These imputed liabilities can be
broken down into two categories:
• liabilities to third parties for
monies that the corporation has
failed to pay, for example, to or for
employees for unpaid wages,
vacation pay, amounts not remitted
pursuant to the Employer Health
Tax and amounts not remitted to
Revenue Canada or the Ontario
Ministry of Revenue under their
respective Income Tax Acts; and,
• liabilities under statutes
containing provisions making
directors guilty of an offence where
the directors have "directed,
authorized, assented to or
acquiesced in" the commission of
an offence under the statute in
question by the corporation.
Generally speaking, the
directors' liability to third parties in
this context arises simply out of the
fact of being a director. It does not
depend upon the director having
done, or not done, anything. The
simplest example is where a
corporation has failed to pay money
owed to certain statutorily protected
persons. In such a situation, the
statute in question will make the
director personally liable to pay the
money. The director may be sued,
judgment recovered and the
director's personal assets seized to
satisfy the judgment.
With respect to a director's
liability for an offence committed
by the corporation, some statutes