Rights and Responsibilities

of Directors
by Me Patrice Blais
A not for profit corporation(NPO)
• Is a legal person
• Has distinct assets and liabilities
• Lives perpetually
• Is constituted according to federal or provincial laws
What is a Director of a legal person ?
• Director is a mandatary of the legal person (art. 321 C.c.Q.)
• The mandatary performs a task on bahalf of another person. He/She
must act in its best interest.
• For a director of a corporation, it means administering the legal
person in all affairs (art. 83 Quebec Companies Act)
• Directors perform their tasks collectively
By-Laws of the legal person
• They create contractual obligations between all parties involved in the
legal person. (art. 313 Quebec Civil Code)
Rights of a directors (individual rights)
• To receive notices of meetings in the correct delay (in By-Laws).
• To vote at meetings of the Board of Directors
• Access to the corporate books of the legal person (including
accounting books)
Obligations of directors
• Prudence and Diligence (art. 322 C.c.Q.)
• Honesty and Loyalty (art. 322 C.c.Q.)

• Potential conflict when nominated from a group vs the role of

director.
Conflicts of Interests
• Difference between conflict and appearance of conflict
• How to manage a conflict of appearant conflict (art. 324 C.c.Q.)
Particular situations to watch for
• Limited liability is the general rule

• Exceptions to limited liability:

• Deductions at source for the legal person
(EI/QPP/QPIP/CSST/CNT/income taxes)
• GST/QST remittances
How to reduce your risk of liability
You should as a director:
• Respect your obligations (art. 322 C.c.Q.)
• Record your dissidence (art. 337 C.c.Q.)
• Resign formally (in relation to art. 85 Quebec Companies Act)

The NPO should have:

• Indemnification clause in your By-Laws
• Directors and officers liability insurance
QUESTIONS ?
Thank you and enjoy the rest of the day!