Can a shareholders' agreement restrict or change a director's duties in Ontario?

Yes, but only through a very specific legal mechanism: a Unanimous Shareholders Agreement, commonly called a USA. Under the Ontario Business Corporations Act, a written agreement among all shareholders of a private corporation can restrict the powers of the directors to manage or supervise the management of the business. When a USA restricts directors' powers, the shareholders who hold those powers under the agreement acquire the corresponding duties and liabilities of directors to the same extent.

This is significant. A USA can effectively transfer governance authority — and liability — from the board to the shareholders themselves. For example, if a USA requires shareholder approval for certain major decisions, the directors lose both the power and the liability associated with those decisions, while the shareholders gain it.

A USA does not, however, allow parties to simply eliminate directors' duties by contract. It shifts duties along with powers; it does not extinguish them. Any attempt to contract out of the core fiduciary duty or duty of care without a properly structured USA will likely be unenforceable. If you are negotiating a shareholders' agreement for a private Ontario corporation, a corporate lawyer should draft or review the governance provisions carefully, because the liability consequences can be unexpected.