Incorporation & Corporate

Director's Duty of Care

Also called: Fiduciary Duty, Duty of Loyalty

A director's legal obligation to act honestly, in good faith, and with the care a reasonably prudent person would exercise.

Canadian corporate statutes require directors to act in the best interests of the corporation itself — not of the shareholder who appointed them. Directors also carry specific personal liabilities, including for certain unpaid wages and unremitted source deductions.

Why it matters: accepting a board seat is not a purely honorary act. Directors can be personally liable in circumstances that surprise people, particularly around unpaid employee amounts.

Related terms

Need this applied to your situation?

A definition can tell you what a term means. It cannot tell you what to do about your matter — that needs a licensed lawyer who knows the facts.

Legal information, not legal advice. Rules differ by province and change over time. A licensed lawyer must review your matter.

Editorial status: Lawkin Editorial — pending independent legal review.

Director's Duty of Care — Canadian legal glossary | Lawkin — Lawkin