Can I be sued personally for my corporation's business debt in Ontario?

Incorporating a business creates a separate legal entity. In general, a creditor of a corporation can only pursue the corporation for its debts — not the individual shareholders or directors personally. This is known as the corporate veil: it shields owners and officers from personal liability for corporate obligations.

However, the shield is not absolute. Personal liability can attach in several situations. Directors can be personally liable for unpaid employee wages under the Ontario Business Corporations Act and for unremitted HST and payroll source deductions under federal legislation. If a director or officer personally guaranteed a corporate debt — as many banks require before lending to a small business — the creditor can sue them personally on the guarantee.

Courts can also "pierce the corporate veil" in exceptional circumstances: if the corporation was used as a sham to defraud creditors, if the corporation and individual were not maintained as genuinely separate entities, or in other cases of abuse. This is a high bar and not routinely granted, but it is a real risk in cases of genuine misconduct.

If you are a director of a company in financial difficulty, you face particular exposure for unpaid source deductions and wages. Seek legal advice before the company stops paying employees or the government — understanding your personal risk early gives you more options.