What obligations do directors of a federal corporation have when operating in Ontario?

Directors of a federal corporation incorporated under the Canada Business Corporations Act carry legal obligations under both the CBCA and, to the extent the corporation does business in Ontario, Ontario law as well.

Under the CBCA, directors owe fiduciary duties to act honestly and in good faith with a view to the best interests of the corporation, and a duty of care to exercise the diligence, care, and skill that a reasonably prudent person would exercise in comparable circumstances. These are similar to the duties imposed on directors by the Ontario Business Corporations Act.

Directors can also face personal liability for certain obligations regardless of whether the corporation is federal or provincial. Unpaid employee wages (up to a statutory limit) and unremitted source deductions (payroll taxes) are common examples where federal law and the Income Tax Act create director liability that applies equally to CBCA and OBCA corporations. HST remittance obligations under the Excise Tax Act similarly impose potential personal liability on directors regardless of the incorporating jurisdiction.

Ontario-specific obligations (such as Ontario Employment Standards Act violations or Ontario environmental obligations) can also apply to directors of federal corporations operating in the province. The choice of federal versus provincial incorporation does not significantly change a director's personal exposure in most practical situations.