What can happen to an Ontario director who breaches their duties to the corporation?

An Ontario director who breaches their duties may face several consequences depending on the nature and severity of the breach. The corporation — or shareholders acting derivatively on the corporation's behalf — can commence a lawsuit seeking damages or an accounting of profits obtained through the breach. Courts can also order equitable remedies such as requiring a director to disgorge profits made from a corporate opportunity they improperly took for themselves.

In certain situations, minority shareholders may apply to the court under the oppression remedy provision of the Ontario Business Corporations Act if director misconduct unfairly prejudices their interests. The oppression remedy is a broad and flexible tool that courts have used to order a wide range of relief, including compensation and corporate restructuring.

Beyond civil liability, specific conduct can attract statutory penalties — for example, knowingly authorizing certain unlawful dividends or financial assistance can expose directors to personal liability for the amount involved. In serious cases involving fraud or misrepresentation, criminal sanctions may apply. Directors who suspect a breach — by themselves or a fellow board member — should seek legal advice quickly, since delay can worsen their exposure and limit available defences.