BURLINGTON BUSINESS LAWYER ontario business corporations act

ONTARIO BUSINESS CORPORATIONS ACT 05/12/2009

Important Notice: The following statute is subject to amendment and legislative changes, so particular attention should be directed to the date of the statute, with reference being made to the official government website for the most current version of a statute at www.e-laws.gov.on.ca.

PART IX

DIRECTORS AND OFFICERS

Directors
115. (1) Subject to any unanimous shareholder agreement, the directors shall manage or supervise the management of the business and affairs of a corporation. R.S.O. 1990, c. B.16, s. 115 (1).
Board of directors
(2) A corporation shall have a board of directors which shall consist of,
(a) in the case of a corporation that is not an offering corporation, at least one individual; and
(b) in the case of a corporation that is an offering corporation, not fewer than three individuals. R.S.O. 1990, c. B.16, s. 115 (2); 1994, c. 27, s. 71 (11).
Idem
(3) At least one-third of the directors of an offering corporation shall not be officers or employees of the corporation or any of its affiliates. R.S.O. 1990, c. B.16, s. 115 (3).
Deemed directors
(4) Where all of the directors have resigned or have been removed by the shareholders without replacement, any person who manages or supervises the management of the business and affairs of the corporation shall be deemed to be a director for the purposes of this Act. 1994, c. 27, s. 71 (12).
Exceptions
(5) Subsection (4) does not apply to,
(a) an officer who manages the business of the corporation under the direction or control of a shareholder or other person;
(b) a lawyer, accountant or other professional who participates in the management of the corporation solely for the purposes of providing professional services; or
(c) a trustee in bankruptcy, receiver, receiver-manager or secured creditor who participates in the management of the corporation or exercises control over its property solely for the purposes of enforcement of a security agreement or administration of a bankrupt’s estate, in the case of a trustee in bankruptcy. 1994, c. 27, s. 71 (12).
By-laws by resolution
116. (1) Unless the articles, the by-laws or a unanimous shareholder agreement otherwise provide, the directors may, by resolution, make, amend or repeal any by-laws that regulate the business or affairs of a corporation. R.S.O. 1990, c. B.16, s. 116 (1).
Confirmation by shareholders
(2) Where the directors make, amend or repeal a by-law under subsection (1), they shall submit the by-law, amendment or repeal to the shareholders at the next meeting of shareholders, and the shareholders may confirm, reject or amend the by-law, amendment or repeal. R.S.O. 1990, c. B.16, s. 116 (2).
Effective date
(3) Where a by-law is made, amended or repealed under subsection (1), the by-law, amendment or repeal is effective from the date of the resolution of the directors until it is confirmed, confirmed as amended or rejected by the shareholders under subsection (2) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed or confirmed as amended, it continues in effect in the form in which it was so confirmed. R.S.O. 1990, c. B.16, s. 116 (3).
Rejection, etc.
(4) If a by-law or an amendment or repeal of a by-law is rejected by the shareholders, or if the directors do not submit the by-law, amendment or repeal to the shareholders as required under subsection (2), the by-law, amendment or repeal ceases to be effective on the date of such rejection or on the date of the meeting of shareholders at which it should have been submitted, as the case may be, and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed or confirmed as amended by the shareholders. R.S.O. 1990, c. B.16, s. 116 (4); 1998, c. 18, Sched. E, s. 21.
By-law re shareholder proposal
(5) If a shareholder proposal to make, amend or repeal a by-law is made in accordance with section 99 and is adopted by shareholders at a meeting, the by-law, amendment or repeal is effective from the date of its adoption and requires no further confirmation. R.S.O. 1990, c. B.16, s. 116 (5).
By-law need not be so described
(6) A by-law need not be described as a by-law in a resolution referred to in this section. R.S.O. 1990, c. B.16, s. 116 (6).
First directors meeting
117. (1) After incorporation, a meeting of the directors of a corporation shall be held at which the directors may,
(a) make by-laws;
(b) adopt forms of security certificates and corporate records;
(c) authorize the issue of securities;
(d) appoint officers;
(e) appoint one or more auditors to hold office until the first annual or special meeting of shareholders;
(f) make banking arrangements; and
(g) transact any other business. R.S.O. 1990, c. B.16, s. 117 (1).
Resolution in writing
(2) Any matter referred to in subsection (1) may be dealt with by the directors by a resolution in writing in accordance with subsection 129 (1). R.S.O. 1990, c. B.16, s. 117 (2).
Where subs. (1) does not apply
(3) Subsection (1) does not apply to a body corporate that is an amalgamated corporation under section 178 or that is continued under section 180. R.S.O. 1990, c. B.16, s. 117 (3).
Calling meeting
(4) An incorporator or a director may call the meeting of directors referred to in subsection (1) by giving not less than five days notice thereof to each director, stating the time and place of the meeting. R.S.O. 1990, c. B.16, s. 117 (4).
Qualifications of directors
118. (1) The following persons are disqualified from being a director of a corporation:
1. A person who is less than eighteen years of age.
2. A person who has been found under the Substitute Decisions Act, 1992 or under the Mental Health Act to be incapable of managing property or who has been found to be incapable by a court in Canada or elsewhere.
3. A person who is not an individual.
4. A person who has the status of bankrupt. R.S.O. 1990, c. B.16, s. 118 (1); 2006, c. 34, Sched. B, s. 19 (1).
Holding shares
(2) Unless the articles otherwise provide, a director of a corporation is not required to hold shares issued by the corporation. R.S.O. 1990, c. B.16, s. 118 (2).
Residency
(3) At least 25 per cent of the directors of a corporation other than a non-resident corporation shall be resident Canadians, but where a corporation has less than four directors, at least one director shall be a resident Canadian. 2006, c. 34, Sched. B, s. 19 (2).
First directors
119. (1) Each director named in the articles shall hold office from the date of endorsement of the certificate of incorporation until the first meeting of shareholders. R.S.O. 1990, c. B.16, s. 119 (1).
Resignation
(2) Until the first meeting of shareholders, the resignation of a director named in the articles shall not be effective unless at the time the resignation is to become effective a successor has been elected or appointed. 1994, c. 27, s. 71 (13).
Powers and duties
(3) The first directors of a corporation named in the articles have all the powers and duties and are subject to all the liabilities of directors. R.S.O. 1990, c. B.16, s. 119 (3).
Election of directors
(4) Subject to clause 120 (a), shareholders of a corporation shall elect, at the first meeting of shareholders and at each succeeding annual meeting at which an election of directors is required, directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election. R.S.O. 1990, c. B.16, s. 119 (4).
Term for directors
(5) It is not necessary that all directors elected at a meeting of shareholders hold office for the same term. R.S.O. 1990, c. B.16, s. 119 (5).
Idem
(6) A director not elected for an expressly stated term ceases to hold office at the close of the first annual meeting of shareholders following his or her election. R.S.O. 1990, c. B.16, s. 119 (6).
Idem
(7) Despite this section, if directors are not elected at a meeting of shareholders the incumbent directors continue in office until their successors are elected. R.S.O. 1990, c. B.16, s. 119 (7).
Failure to elect required number of directors
(8) If a meeting of shareholders fails to elect the number of directors required by the articles or by section 125 by reason of the disqualification, incapacity or death of one or more candidates, the directors elected at that meeting, if they constitute a quorum, may exercise all the powers of the directors of the corporation pending the holding of a meeting of shareholders in accordance with subsection 124 (3). R.S.O. 1990, c. B.16, s. 119 (8).
Consent required
(9) Subject to subsection (10), the election or appointment of a director under this Act is not effective unless the person elected or appointed consents in writing before or within 10 days after the date of the election or appointment. 1999, c. 12, Sched. F, s. 8.
Later consent
(10) If the person elected or appointed consents in writing after the time period mentioned in subsection (9), the election or appointment is valid. 1999, c. 12, Sched. F, s. 8.
Exception
(11) Subsection (9) does not apply to a director who is re-elected or re-appointed where there is no break in the director’s term of office. 1999, c. 12, Sched. F, s. 8.
Cumulative voting for directors
120. Where the articles provide for cumulative voting,
(a) each shareholder entitled to vote at an election of directors has the right to cast a number of votes equal to the number of votes attached to the shares held by the shareholder multiplied by the number of directors to be elected, and the shareholder may cast all such votes in favour of one candidate or distribute them among the candidates in any manner;
(b) a separate vote of shareholders shall be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting two or more persons to be elected by a single resolution;
(c) if a shareholder has voted for more than one candidate without specifying the distribution of the shareholder’s votes among the candidates, the shareholder is deemed to have distributed the shareholder’s votes equally among the candidates for whom the shareholder voted;
(d) if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes shall be eliminated until the number of candidates remaining equals the number of positions to be filled;
(e) each director ceases to hold office at the close of the first annual meeting of shareholders following his or her election;
(f) a director may not be removed from office if the votes cast against the director’s removal would be sufficient to elect him or her and such votes could be voted cumulatively at an election at which the same total number of votes were cast and the number of directors required by the articles were then being elected;
(g) the number of directors required by the articles may not be decreased if the votes cast against the motion to decrease would be sufficient to elect a director and such votes could be voted cumulatively at an election at which the same total number of votes were cast and the number of directors required by the articles were then being elected; and
(h) the articles shall require a fixed number and not a minimum and maximum number of directors. R.S.O. 1990, c. B.16, s. 120.
When director ceases to hold office
121. (1) A director of a corporation ceases to hold office when he or she,
(a) dies or, subject to subsection 119 (2), resigns;
(b) is removed in accordance with section 122; or
(c) becomes disqualified under subsection 118 (1). R.S.O. 1990, c. B.16, s. 121 (1).
Idem
(2) A resignation of a director becomes effective at the time a written resignation is received by the corporation or at the time specified in the resignation, whichever is later. R.S.O. 1990, c. B.16, s. 121 (2).
Removal of directors
122. (1) Subject to clause 120 (f), the shareholders of a corporation may by ordinary resolution at an annual or special meeting remove any director or directors from office. R.S.O. 1990, c. B.16, s. 122 (1).
Idem
(2) Where the holders of any class or series of shares of a corporation have an exclusive right to elect one or more directors, a director so elected may only be removed by an ordinary resolution at a meeting of the shareholders of that class or series. R.S.O. 1990, c. B.16, s. 122 (2).
Idem
(3) Subject to clauses 120 (a) to (d), a vacancy created by the removal of a director may be filled at the meeting of the shareholders at which the director is removed or, if not so filled, may be filled under section 124. R.S.O. 1990, c. B.16, s. 122 (3).
Entitlement of director
123. (1) A director of a corporation is entitled to receive notice of and to attend and be heard at every meeting of shareholders. R.S.O. 1990, c. B.16, s. 123 (1).
Idem
(2) A director who,
(a) resigns;
(b) receives a notice or otherwise learns of a meeting of shareholders called for the purpose of removing him or her from office; or
(c) receives a notice or otherwise learns of a meeting of directors or shareholders at which another person is to be appointed or elected to fill the office of director, whether because of the resignation or removal of the director or because his or her term of office has expired or is about to expire,
is entitled to submit to the corporation a written statement giving the reasons for the director’s resignation or the reasons why he or she opposes any proposed action or resolution, as the case may be. R.S.O. 1990, c. B.16, s. 123 (2).
Distribution of statement
(3) Upon receiving a statement under subsection (2), a corporation shall forthwith send a copy of the statement to every shareholder entitled to receive notice of meetings of shareholders unless the statement is included in or attached to a management information circular required by section 112. R.S.O. 1990, c. B.16, s. 123 (3); 2004, c. 19, s. 3 (3).
No liability
(4) No corporation or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (3). R.S.O. 1990, c. B.16, s. 123 (4).
Vacancies
124. (1) Despite subsection 126 (6), but subject to subsections (2), (4) and (5) of this section, a quorum of directors may fill a vacancy among the directors, except a vacancy resulting from,
(a) an increase in the number of directors otherwise than in accordance with subsection (2), or in the maximum number of directors, as the case may be; or
(b) a failure to elect the number of directors required to be elected at any meeting of shareholders. R.S.O. 1990, c. B.16, s. 124 (1).
Appointment of directors subsequent to annual meeting
(2) Where a special resolution passed under subsection 125 (3) empowers the directors of a corporation the articles of which provide for a minimum and maximum number of directors to determine the number of directors, the directors may not, between meetings of shareholders, appoint an additional director if, after such appointment, the total number of directors would be greater than one and one-third times the number of directors required to have been elected at the last annual meeting of shareholders. R.S.O. 1990, c. B.16, s. 124 (2).
Election of directors to make quorum
(3) If there is not a quorum of directors, or if there has been a failure to elect the number of directors required by the articles or by section 125, the directors then in office shall forthwith call a special meeting of shareholders to fill the vacancy and, if they fail to call a meeting or if there are no directors then in office, the meeting may be called by any shareholder. R.S.O. 1990, c. B.16, s. 124 (3).
Where elected by class of shareholders
(4) Where the holders of any class or series of shares of a corporation have an exclusive right to elect one or more directors and a vacancy occurs among those directors,
(a) subject to subsection (5), the remaining directors elected by that class or series may fill the vacancy except a vacancy resulting from an increase in the number of directors for that class or series or from a failure to elect the number of directors for that class or series; or
(b) if there are no such remaining directors, any holder of shares of that class or series may call a meeting of the holders thereof for the purpose of filling the vacancy. R.S.O. 1990, c. B.16, s. 124 (4).
Idem, where no quorum
(5) The articles may provide that a vacancy among the directors shall only be filled by a vote of the shareholders, or by a vote of the holders of any class or series of shares having an exclusive right to elect one or more directors if the vacancy occurs among the directors elected by that class or series. R.S.O. 1990, c. B.16, s. 124 (5).
Term
(6) A director appointed or elected to fill a vacancy holds office for the unexpired term of the director’s predecessor. R.S.O. 1990, c. B.16, s. 124 (6).
Change in number of directors
125. (1) A corporation may increase or decrease the number, or the minimum or maximum number, of its directors in accordance with clause 168 (1) (m), but no decrease in the number of directors shall shorten the term of an incumbent director. R.S.O. 1990, c. B.16, s. 125 (1).
Articles amendment
(2) Where a corporation has increased or decreased the number of directors by special by-law under a predecessor of this Act, the special by-law shall be deemed to constitute an amendment to its articles. R.S.O. 1990, c. B.16, s. 125 (2).
Number of directors
(3) Where a minimum and maximum number of directors of a corporation is provided for in its articles, the number of directors of the corporation and the number of directors to be elected at the annual meeting of the shareholders shall be such number as shall be determined from time to time by special resolution or, if the special resolution empowers the directors to determine the number, by resolution of the directors. R.S.O. 1990, c. B.16, s. 125 (3).
Idem
(4) Where no resolution has been passed under subsection (3), the number of directors of the corporation shall be the number of directors named in its articles. R.S.O. 1990, c. B.16, s. 125 (4).
(5) Repealed: 1998, c. 18, Sched. E, s. 22 (1).
(6) Repealed: 1998, c. 18, Sched. E, s. 22 (2).
Place of meetings and quorum
126. (1) Subject to subsection (2), a meeting of the board of directors shall be held at the place where the registered office of the corporation is located. R.S.O. 1990, c. B.16, s. 126 (1).
Exceptions
(2) Where the by-laws of the corporation so provide, a meeting of the board of directors may be held at any place within or outside Ontario, but, except where the corporation is a non-resident corporation or the articles or the by-laws otherwise provide, in any financial year of the corporation a majority of the meetings of the board of directors shall be held at a place within Canada. R.S.O. 1990, c. B.16, s. 126 (2).
Quorum
(3) Subject to the articles or by-laws and subsection (4), a majority of the number of directors or minimum number of directors required by the articles constitutes a quorum at any meeting of directors, but in no case shall a quorum be less than two-fifths of the number of directors or minimum number of directors, as the case may be. R.S.O. 1990, c. B.16, s. 126 (3).
Idem
(4) Where a corporation has fewer than three directors, all directors must be present at any meeting of directors to constitute a quorum. R.S.O. 1990, c. B.16, s. 126 (4).
Idem
(5) Subject to the articles or by-laws, where there is a vacancy or vacancies in the board of directors, the remaining directors may exercise all the powers of the board so long as a quorum of the board remains in office. R.S.O. 1990, c. B.16, s. 126 (5).
(6), (7) Repealed: 2006, c. 34, Sched. B, s. 20.
Calling meeting of directors
(8) In addition to any other provision in the articles or by-laws of a corporation for calling meetings of directors, a quorum of the directors may, at any time, call a meeting of the directors for the transaction of any business the general nature of which is specified in the notice calling the meeting. R.S.O. 1990, c. B.16, s. 126 (8).
Notice
(9) In the absence of any other provision in that behalf in the by-laws of the corporation, notice of the time and place for the holding of the meeting called under subsection (8) shall be given to every director of the corporation by sending the notice ten days or more before the date of the meeting to each director’s latest address as shown on the records of the corporation. R.S.O. 1990, c. B.16, s. 126 (9).
Waiver of notice
(10) A director may in any manner and at any time waive a notice of a meeting of directors and attendance of a director at a meeting of directors is a waiver of notice of the meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. R.S.O. 1990, c. B.16, s. 126 (10).
Adjourned meeting
(11) Notice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting is announced at the original meeting. R.S.O. 1990, c. B.16, s. 126 (11).
Where one director
(12) Where a corporation has only one director, that director may constitute a meeting. R.S.O. 1990, c. B.16, s. 126 (12).
Meeting by telephone, etc.
(13) Unless the by-laws otherwise provide, if all the directors of a corporation present at or participating in the meeting consent, a meeting of directors or of a committee of directors may be held by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and a director participating in such a meeting by such means is deemed for the purposes of this Act to be present at that meeting. R.S.O. 1990, c. B.16, s. 126 (13).
Place of meeting by telephone
(14) If a majority of the directors participating in a meeting held under subsection (13) are then in Canada, the meeting shall be deemed to have been held in Canada. R.S.O. 1990, c. B.16, s. 126 (14).
Delegation by directors
127. (1) Subject to the articles or by-laws, directors of a corporation may appoint from their number a managing director or a committee of directors and delegate to such managing director or committee any of the powers of the directors. 2006, c. 34, Sched. B, s. 21 (1).
(2) Repealed: 2006, c. 34, Sched. B, s. 21 (2).
Limitations on authority
(3) Despite subsection (1), no managing director and no committee of directors has authority to,
(a) submit to the shareholders any question or matter requiring the approval of the shareholders;
(b) fill a vacancy among the directors or in the office of auditor or appoint or remove any of the chief executive officers, however designated, the chief financial officer, however designated, the chair or the president of the corporation;
(c) subject to section 184, issue securities except in the manner and on the terms authorized by the directors;
(d) declare dividends;
(e) purchase, redeem or otherwise acquire shares issued by the corporation;
(f) pay a commission referred to in section 37;
(g) approve a management information circular referred to in Part VIII;
(h) approve a take-over bid circular, directors’ circular or issuer bid circular referred to in Part XX of the Securities Act;
(i) approve any financial statements referred to in clause 154 (1) (b) of the Act and Part XVIII of the Securities Act;
(i.1) approve an amalgamation under section 177 or an amendment to the articles under subsection 168 (2) or (4); or
(j) adopt, amend or repeal by-laws. R.S.O. 1990, c. B.16, s. 127 (3); 1994, c. 27, s. 71 (16).
Validity of acts of directors and officers
128. An act done by a director or by an officer is not invalid by reason only of any defect that is thereafter discovered in his or her appointment, election or qualification. R.S.O. 1990, c. B.16, s. 128.
Resolutions in writing
129. (1) A resolution in writing, signed by all the directors entitled to vote on that resolution at a meeting of directors or a committee of directors, is as valid as if it had been passed at a meeting of directors or a committee of directors. R.S.O. 1990, c. B.16, s. 129 (1).
Copy to be kept
(2) A copy of every resolution passed under subsection (1) shall be kept with the minutes of the proceedings of the directors or committee of directors. R.S.O. 1990, c. B.16, s. 129 (2).
Liability of directors
130. (1) Directors of a corporation who vote for or consent to a resolution authorizing the issue of a share for a consideration other than money contrary to section 23 are jointly and severally liable to the corporation to make good any amount by which the consideration received is less than the fair equivalent of the money that the corporation would have received if the share had been issued for money on the date of the resolution. R.S.O. 1990, c. B.16, s. 130 (1).
Idem
(2) Directors of a corporation who vote for or consent to a resolution authorizing,
(a) Repealed: 2006, c. 34, Sched. B, s. 22 (1).
(b) a purchase, redemption or other acquisition of shares contrary to section 30, 31 or 32;
(c) a commission contrary to section 37;
(d) a payment of a dividend contrary to section 38;
(e) a payment of an indemnity contrary to section 136; or
(f) a payment to a shareholder contrary to section 185 or 248,
are jointly and severally liable to restore to the corporation any amounts so distributed or paid and not otherwise recovered by the corporation. R.S.O. 1990, c. B.16, s. 130 (2); 2006, c. 34, Sched. B, s. 22 (1).
Joint liability
(3) A director who has satisfied a judgment rendered under this section is entitled to contribution from the other directors who voted for or consented to the unlawful act upon which the judgment was founded. R.S.O. 1990, c. B.16, s. 130 (3).
Application to court
(4) A director liable under subsection (2) is entitled to apply to the court for an order compelling a shareholder or other recipient to pay or deliver to the director any money or property that was paid or distributed to the shareholder or other recipient contrary to section 30, 31, 32, 37, 38, 136, 185 or 248. R.S.O. 1990, c. B.16, s. 130 (4); 2006, c. 34, Sched. B, s. 22 (2).
What court may order
(5) In connection with an application under subsection (4), the court may, if it is satisfied that it is equitable to do so,
(a) order a shareholder or other recipient to pay or deliver to a director any money or property that was paid or distributed to the shareholder or other recipient contrary to section 30, 31, 32, 37, 38, 136, 185 or 248;
(b) order a corporation to return or issue shares to a person from whom the corporation has purchased, redeemed or otherwise acquired shares; or
(c) make any further order it thinks fit. R.S.O. 1990, c. B.16, s. 130 (5); 2006, c. 34, Sched. B, s. 22 (3).
Exception to subs. (1)
(6) A director is not liable under subsection (1) if the director proves that he or she did not know and could not reasonably have known that the share was issued for a consideration less than the fair equivalent of the money that the corporation would have received if the share had been issued for money. R.S.O. 1990, c. B.16, s. 130 (6).
(7) Repealed: 2002, c. 24, Sched. B, s. 25.
Directors’ liability to employees for wages
131. (1) The directors of a corporation are jointly and severally liable to the employees of the corporation for all debts not exceeding six months’ wages that become payable while they are directors for services performed for the corporation and for the vacation pay accrued while they are directors for not more than twelve months under the Employment Standards Act, and the regulations thereunder, or under any collective agreement made by the corporation. R.S.O. 1990, c. B.16, s. 131 (1).
Limitation of liability
(2) A director is liable under subsection (1) only if,
(a) the corporation is sued in the action against the director and execution against the corporation is returned unsatisfied in whole or in part; or
(b) before or after the action is commenced, the corporation goes into liquidation, is ordered to be wound up or makes an authorized assignment under the Bankruptcy and Insolvency Act (Canada), or a receiving order under that Act is made against it, and, in any such case, the claim for the debt has been proved. 2002, c. 24, Sched. B, s. 27 (1).
Idem
(3) Where execution referred to in clause (2) (b) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution. R.S.O. 1990, c. B.16, s. 131 (3).
Rights of director who pays debt
(4) Where a director pays a debt under subsection (1) that is proved in liquidation and dissolution or bankruptcy proceedings, the director is entitled to any preference that the employee would have been entitled to, and where a judgment has been obtained the director is entitled to an assignment of the judgment. R.S.O. 1990, c. B.16, s. 131 (4).
Idem
(5) A director who has satisfied a claim under this section is entitled to contribution from the other directors who were liable for the claim. R.S.O. 1990, c. B.16, s. 131 (5).
Disclosure: conflict of interest
132. (1) A director or officer of a corporation who,
(a) is a party to a material contract or transaction or proposed material contract or transaction with the corporation; or
(b) is a director or an officer of, or has a material interest in, any person who is a party to a material contract or transaction or proposed material contract or transaction with the corporation,
shall disclose in writing to the corporation or request to have entered in the minutes of meetings of directors the nature and extent of his or her interest. R.S.O. 1990, c. B.16, s. 132 (1).
by director
(2) The disclosure required by subsection (1) shall be made, in the case of a director,
(a) at the meeting at which a proposed contract or transaction is first considered;
(b) if the director was not then interested in a proposed contract or transaction, at the first meeting after he or she becomes so interested;
(c) if the director becomes interested after a contract is made or a transaction is entered into, at the first meeting after he or she becomes so interested; or
(d) if a person who is interested in a contract or transaction later becomes a director, at the first meeting after he or she becomes a director. R.S.O. 1990, c. B.16, s. 132 (2).
by officer
(3) The disclosure required by subsection (1) shall be made, in the case of an officer who is not a director,
(a) forthwith after the officer becomes aware that the contract or transaction or proposed contract or transaction is to be considered or has been considered at a meeting of directors;
(b) if the officer becomes interested after a contract is made or a transaction is entered into, forthwith after he or she becomes so interested; or
(c) if a person who is interested in a contract or transaction later becomes an officer, forthwith after he or she becomes an officer. R.S.O. 1990, c. B.16, s. 132 (3).
Where contract or transaction does not require approval
(4) Despite subsections (2) and (3), where subsection (1) applies to a director or officer in respect of a material contract or transaction or proposed material contract or transaction that, in the ordinary course of the corporation’s business, would not require approval by the directors or shareholders, the director or officer shall disclose in writing to the corporation or request to have entered in the minutes of meetings of directors the nature and extent of his or her interest forthwith after the director or officer becomes aware of the contract or transaction or proposed contract or transaction. R.S.O. 1990, c. B.16, s. 132 (4).
Director not to vote
(5) A director referred to in subsection (1) shall not attend any part of a meeting of directors during which the contract or transaction is discussed and shall not vote on any resolution to approve the contract or transaction unless the contract or transaction is,
(a) one relating primarily to his or her remuneration as a director of the corporation or an affiliate;
(b) one for indemnity or insurance under section 136; or
(c) one with an affiliate. 2006, c. 34, Sched. B, s. 23 (1).
Remaining directors deemed quorum
(5.1) If no quorum exists for the purpose of voting on a resolution to approve a contract or transaction only because a director is not permitted to be present at the meeting by reason of subsection (5), the remaining directors shall be deemed to constitute a quorum for the purposes of voting on the resolution. 2006, c. 34, Sched. B, s. 23 (2).
Shareholder approval
(5.2) Where all of the directors are required to make disclosure under subsection (1), the contract or transaction may be approved only by the shareholders. 2006, c. 34, Sched. B, s. 23 (2).
Continuing disclosure
(6) For the purposes of this section, a general notice to the directors by a director or officer disclosing that he or she is a director or officer of or has a material interest in a person, or that there has been a material change in the director’s or officer’s interest in the person, and is to be regarded as interested in any contract made or any transaction entered into with that person, is sufficient disclosure of interest in relation to any such contract or transaction. 2006, c. 34, Sched. B, s. 23 (3).
Effect of disclosure
(7) Where a material contract is made or a material transaction is entered into between a corporation and a director or officer of the corporation, or between a corporation and another person of which a director or officer of the corporation is a director or officer or in which he or she has a material interest,
(a) the director or officer is not accountable to the corporation or its shareholders for any profit or gain realized from the contract or transaction; and
(b) the contract or transaction is neither void nor voidable,
by reason only of that relationship or by reason only that the director is present at or is counted to determine the presence of a quorum at the meeting of directors that authorized the contract or transaction, if the director or officer disclosed his or her interest in accordance with subsection (2), (3), (4) or (6), as the case may be, and the contract or transaction was reasonable and fair to the corporation at the time it was so approved. R.S.O. 1990, c. B.16, s. 132 (7).
Confirmation by shareholders
(8) Despite anything in this section, a director or officer, acting honestly and in good faith, is not accountable to the corporation or to its shareholders for any profit or gain realized from any such contract or transaction by reason only of his or her holding the office of director or officer, and the contract or transaction, if it was reasonable and fair to the corporation at the time it was approved, is not by reason only of the director’s or officer’s interest therein void or voidable, where,
(a) the contract or transaction is confirmed or approved by special resolution at a meeting of the shareholders duly called for that purpose; and
(b) the nature and extent of the director’s or officer’s interest in the contract or transaction are disclosed in reasonable detail in the notice calling the meeting or in the information circular required by section 112. R.S.O. 1990, c. B.16, s. 132 (8).
Court setting aside contract
(9) Subject to subsections (7) and (8), where a director or officer of a corporation fails to disclose his or her interest in a material contract or transaction in accordance with this section or otherwise fails to comply with this section, the corporation or a shareholder of the corporation, or, in the case of an offering corporation, the Commission may apply to the court for an order setting aside the contract or transaction and directing that the director or officer account to the corporation for any profit or gain realized and upon such application the court may so order or make such other order as it thinks fit. R.S.O. 1990, c. B.16, s. 132 (9).
Officers
133. Subject to the articles, the by-laws or any unanimous shareholder agreement,
(a) the directors may designate the offices of the corporation, appoint officers, specify their duties and delegate to them powers to manage the business and affairs of the corporation, except, subject to section 184, powers to do anything referred to in subsection 127 (3);
(b) a director may be appointed to any office of the corporation; and
(c) two or more offices of the corporation may be held by the same person. R.S.O. 1990, c. B.16, s. 133.
Standards of care, etc., of directors, etc.
134. (1) Every director and officer of a corporation in exercising his or her powers and discharging his or her duties to the corporation shall,
(a) act honestly and in good faith with a view to the best interests of the corporation; and
(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. R.S.O. 1990, c. B.16, s. 134 (1); 2006, c. 34, Sched. B, s. 24.
Duty to comply with Act, etc.
(2) Every director and officer of a corporation shall comply with this Act, the regulations, articles, by-laws and any unanimous shareholder agreement. R.S.O. 1990, c. B.16, s. 134 (2).
Cannot contract out of liability
(3) Subject to subsection 108 (5), no provision in a contract, the articles, the by-laws or a resolution relieves a director or officer from the duty to act in accordance with this Act and the regulations or relieves him or her from liability for a breach thereof. R.S.O. 1990, c. B.16, s. 134 (3).
Consent of director at meeting
135. (1) A director who is present at a meeting of directors or committee of directors is deemed to have consented to any resolution passed or action taken thereat unless the director,
(a) requests that his or her dissent be or his or her dissent is entered in the minutes of the meeting;
(b) sends a written dissent to the secretary of the meeting before the meeting is terminated; or
(c) sends a dissent by registered mail or delivers it to the registered office of the corporation immediately after the meeting is terminated. R.S.O. 1990, c. B.16, s. 135 (1).
Idem
(2) A director who votes for or consents to a resolution is not entitled to dissent under subsection (1). R.S.O. 1990, c. B.16, s. 135 (2).
Idem
(3) A director who was not present at a meeting at which a resolution was passed or action taken is deemed to have consented thereto unless within seven days after becoming aware of the resolution the director,
(a) causes his or her dissent to be placed with the minutes of the meeting; or
(b) sends his or her dissent by registered mail or delivers it to the registered office of the corporation. R.S.O. 1990, c. B.16, s. 135 (3).
Reasonable diligence defence
(4) A director is not liable under section 130 and has complied with his or her duties under subsection 134 (2) if the director exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on,
(a) financial statements of the corporation represented to him or her by an officer of the corporation or in a written report of the auditor of the corporation to present fairly the financial position of the corporation in accordance with generally accepted accounting principles;
(b) an interim or other financial report of the corporation represented to him or her by an officer of the corporation to present fairly the financial position of the corporation in accordance with generally accepted accounting principles;
(c) a report or advice of an officer or employee of the corporation, where it is reasonable in the circumstances to rely on the report or advice; or
(d) a report of a lawyer, accountant, engineer, appraiser or other person whose profession lends credibility to a statement made by any such person. 2006, c. 34, Sched. B, s. 25.
Indemnification
136. (1) A corporation may indemnify a director or officer of the corporation, a former director or officer of the corporation or another individual who acts or acted at the corporation’s request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the corporation or other entity. 2006, c. 34, Sched. B, s. 26.
Advance of costs
(2) A corporation may advance money to a director, officer or other individual for the costs, charges and expenses of a proceeding referred to in subsection (1), but the individual shall repay the money if the individual does not fulfil the conditions set out in subsection (3). 2006, c. 34, Sched. B, s. 26.
Limitation
(3) A corporation shall not indemnify an individual under subsection (1) unless the individual acted honestly and in good faith with a view to the best interests of the corporation or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at the corporation’s request. 2006, c. 34, Sched. B, s. 26.
Same
(4) In addition to the conditions set out in subsection (3), if the matter is a criminal or administrative action or proceeding that is enforced by a monetary penalty, the corporation shall not indemnify an individual under subsection (1) unless the individual had reasonable grounds for believing that the individual’s conduct was lawful. 2006, c. 34, Sched. B, s. 26.
Derivative actions
(4.1) A corporation may, with the approval of a court, indemnify an individual referred to in subsection (1), or advance moneys under subsection (2), in respect of an action by or on behalf of the corporation or other entity to obtain a judgment in its favour, to which the individual is made a party because of the individual’s association with the corporation or other entity as described in subsection (1), against all costs, charges and expenses reasonably incurred by the individual in connection with such action, if the individual fulfils the conditions set out in subsection (3). 2006, c. 34, Sched. B, s. 26.
Right to indemnity
(4.2) Despite subsection (1), an individual referred to in that subsection is entitled to indemnity from the corporation in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual’s association with the corporation or other entity as described in subsection (1), if the individual seeking an indemnity,
(a) was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done; and
(b) fulfils the conditions set out in subsections (3) and (4). 2006, c. 34, Sched. B, s. 26.
Insurance
(4.3) A corporation may purchase and maintain insurance for the benefit of an individual referred to in subsection (1) against any liability incurred by the individual,
(a) in the individual’s capacity as a director or officer of the corporation; or
(b) in the individual’s capacity as a director or officer, or a similar capacity, of another entity, if the individual acts or acted in that capacity at the corporation’s request. 2006, c. 34, Sched. B, s. 26.
Application to court
(5) A corporation or a person referred to in subsection (1) may apply to the court for an order approving an indemnity under this section and the court may so order and make any further order it thinks fit. R.S.O. 1990, c. B.16, s. 136 (5).
Idem
(6) Upon an application under subsection (5), the court may order notice to be given to any interested person and such person is entitled to appear and be heard in person or by counsel. R.S.O. 1990, c. B.16, s. 136 (6).
Remuneration of directors
137. Subject to the articles, the by-laws or any unanimous shareholder agreement, the directors of a corporation may fix the remuneration of the directors, officers and employees of the corporation. R.S.O. 1990, c. B.16, s. 137.

Burlington Business Lawyer Christopher R. Neufeld is a corporate attorney admitted to practice law in both Ontario (Canada) and New York (U.S.A.). Christopher's legal practice focuses primarily on business law, in particular corporate commercial transactions. The law firm of Neufeld Legal Professional Corporation is headquartered at 719 Catalina Crescent, Burlington, Ontario L7L 5B9, and as such is in immediate proximity to downtown Toronto, Mississauga, Hamilton, Oakville, Brampton, Milton, Guelph and Kitchener Waterloo. COPYRIGHT 2009.

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