CANADA Law and Practice Contributed by: Clifton Prophet, David F W Cohen, Virginie Gauthier, Thomas Gertner and Kate Yurkovich, Gowling WLG
There are a number of defences to recognising a for - eign judgment, including on public policy grounds. Once recognised, however, a foreign judgment can be enforced in a manner similar to a domestic judgment. 6.5 Co-Ordination in Cross-Border Cases In limited circumstances, Canadian courts have entered into protocols with foreign courts to co-ordi - nate cross-border proceedings. 6.6 Foreign Creditors Foreign creditors are dealt with in the same manner as domestic creditors. That being said, in the absence of a recognition order in their local jurisdiction, foreign creditors will not be subject to the stay of proceedings in their home jurisdiction. 7. Duties and Liability of Directors and Officers 7.1 Duties of Directors Corporate directors in Canada are subject to statutory and common law duties. Two general obligations that are imposed on directors are: • a fiduciary duty to act honestly, in good faith, and with a view to the best interests of the corporation; and • a duty of care to exercise the care, diligence and skill of a reasonably prudent person in similar cir - cumstances. A director’s fiduciary duty is owed to the corporation alone, although the interests of stakeholders such as shareholders, employees or creditors, among others, may be taken into account in considering what is in the best interest of the corporation. There are no express obligations imposed on the directors of a debtor to initiate bankruptcy or restruc - turing proceedings. However, directors may consider it prudent to commence insolvency proceedings to avoid or minimise statutory liabilities for which the directors may be personally liable by reason of being a director of an insolvent company.
Directors may also consider that an insolvency filing is required to avoid any potential claims that the debtor traded while “knowingly insolvent”, or that the debtor conducted its affairs in a manner that was oppressive to its stakeholders. 7.2 Personal Liability of Directors Corporate directors can attract personal liability under a number of provincial and federal statutes includ - ing laws governing business corporations, taxation, employment, environmental protection and securities. For example, with respect to labour relations, person - al liability is imposed on directors for unpaid wages, accrued vacation pay and, in certain cases, pension plan contributions that are due but unpaid. Directors are personally liable for payroll remittances for amounts deducted from employees’ wages on account of income taxes, contributions to the Canada (or Quebec, as applicable) Pension Plan, and employ - ment insurance premiums. Directors will not be held personally liable for the above to the extent they can show that they were duly diligent, or that the failure to remit the amounts required in a timely manner was due to circumstances beyond their control. Furthermore, directors may also be held personally liable for a corporation’s default in payment of its goods and services tax or harmonised sales tax (HST) obligations. Corporate directors may also be held personally liable if they are found to have acted improperly so as to cause a loss to the company’s creditors. 7.3 Duties and Personal Liability of Officers Generally speaking, the authority and powers of an officer to manage the business of a corporation are derived from being appointed by the board of direc - tors. Senior officers may attract common law liability and be subject to the same fiduciary obligations as a cor - poration’s directors. Furthermore, officers are subject to the same statutory duty of care as directors.
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