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Directors and corporate governance
July 18, 2025
Recently someone told me they were directed by an
aging parent to sign corporate documents for audit
waivers. They were assured it would be okay. This was a
few years ago. Every year they sign these documents
without asking any questions. They don't keep copies of
the documents, returning the documents directly to the
lawyers, they assume this was fine because the parent
said so all those years ago.
To sign such
documents, you must be a director or officer of the
corporation, not just a minority shareholder. Might it
be likely they are signing not only an audit waiver but
approval of a waiver of the annual general meeting.
Who is in charge of the corporation? They
have never been invited to a board meetings. This year
they received dividends without any explanation. They
don't know what shares they own, how many, what type as
in common or preference, voting or non voting, or under
what authority they are signing these documents. They
don't know if the company is federally or provincially
incorporated.
Wonder how often this happens
in family business's? Probably more often than anyone
cares to admit.
Here's one guide that explains
the responsibilities of corporate directors in Canada
published by Osler, Hoskin & Harcourt LLP in March
2009 which makes reference to tough economic times
making decisions by directors more difficult and the
potential for increased personal
liability:
http://www.osler.com/uploadedFiles/Resources/Publications/8115_CorpGovCanada2009.pdf
Being
the director of an NPO may be even more challenging in
tough economic times. For all sorts of resources see my
webpage at
www.taxdetective.ca/nonprofitlinks.html
and
Industry Canada's Primer for directors of
NPO's:
http://www.ic.gc.ca/eic/site/cilp-pdci.nsf/eng/h_cl00688.html
Disclaimer:
Eileen Reppenhagen CGA does
not research or endorse any
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posted on this site.
Please
do NOT rely on or use the
information on this website as a
basis for a course of action without
obtaining appropriate professional
advice
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