Can an Ontario Director Rely on Professional Advice to Avoid Liability?

Directors are often non-experts asked to make expert-level calls — on tax filings, workplace safety compliance, financial statements, or an employee termination. It's common practice, and often good practice, to hire a lawyer or accountant and follow their advice. The question directors ask afterward, usually once something has gone wrong, is whether that reliance actually protects them personally.

The short answer is that reliance on professional advice can genuinely help a director's position, but it is not an automatic shield. How the advice was obtained and used matters as much as the fact that it was obtained at all.

Why This Question Comes Up

Incorporating does not, by itself, eliminate every form of personal exposure for a director. Certain statutory obligations — like ensuring source deductions and HST are remitted, or meeting specific requirements under employment and workplace safety legislation — can attach to individual directors in some circumstances, separate from the general limited-liability protection the corporation otherwise provides. Where a director can point to reasonable steps taken to prevent a problem, good-faith reliance on qualified professional advice is often one of the most important steps to be able to show.

What Generally Strengthens a Reliance Argument

A director's reliance on advice tends to carry more weight where:

1. The professional was actually qualified for the specific question asked — a corporate lawyer for a governance question, an accountant for a tax question, an employment lawyer for a termination question.
2. The director gave the professional complete and accurate information. Advice built on an incomplete picture protects no one.
3. The advice was actually followed, not obtained and then quietly overridden.
4. The director genuinely turned their mind to the advice, rather than treating the engagement as a box to check.
5. The reliance was reasonable given the circumstances — a director generally can't ignore an obvious red flag simply because a professional signed off on something.

What Weakens It

• Asking the wrong kind of professional (a general bookkeeper for a complex legal question, for example).
• Withholding or misrepresenting facts that would have changed the advice.
• Receiving advice that flagged a risk, and proceeding anyway without addressing it.
• Treating an engagement letter as after-the-fact cover, rather than genuine guidance sought before acting.

How This Fits Into the Bigger Picture

Reliance on professional advice sits alongside the general duty of care every director owes — to act with the diligence, care, and skill a reasonably prudent person would exercise in comparable circumstances — and connects closely to the business judgment rule, the principle that courts generally defer to a good-faith, informed business decision even if it turns out badly. Good professional advice, properly sought and followed, is one of the clearest ways to show a decision was informed.

None of this replaces basic personal-liability planning that has nothing to do with advice at all — for example, understanding exactly what you are personally guaranteeing when you sign a loan or lease on the corporation's behalf, which is a separate source of exposure entirely.

A Practical Checklist Before You Rely on Advice

• [ ] Confirm the professional's expertise actually matches the question.
• [ ] Put the request in writing and provide complete, accurate information.
• [ ] Keep the advice — and your instructions to the professional — in the corporate records.
• [ ] Discuss the advice at the board level where it affects a significant decision, and record that discussion in the minutes.
• [ ] Follow the advice, or document clearly why the board departed from it and on what basis.

Frequently asked questions