Qualifications for Directors of Ontario Companies
13 Feb 2016

Qualifications for Directors of Ontario Companies

by | posted in: Directors, Incorporating in Ontario, Incorporation, Maintaining Your Company, Ontario, Ontario Business Corporations Act | 0

A director is an individual who is elected by the shareholders (owners) of the company to assist with the management and supervision of the day to day affairs of the company. Frequently the directors of a company are also the owners of the company.  Not just anyone can be a director of an Ontario company. In order to meet the qualifications for directors of Ontario companies reference must be made to the statute that governs Ontario companies.

How many directors can an Ontario Company Have

Ontario companies must have at least one director for private companies and at least three directors for public companies.  There is no limit on the number of directors an Ontario company may have and if a private company wishes to have many directors it may do so.

Who can Qualify to Act as a Director of an Ontario Company

The Business Corporations Act (Ontario) explains this requirement by outlining what disqualifies someone from being a director of an Ontario company.

The following persons are disqualified from being directors of an Ontario company:

    1. A person who is less than 18 years of age;
  1. A person who has been found under the Substitute Decisions Act, 1992 (Ontario) or under the Mental Health Act (Ontario) to be incapable of managing property or who has been found to be incapable by a court of Canada or elsewhere;
  2. A person who is not an individual; or
  3. A person who has the status of bankrupt.

Director’s Consent to Act as a Director

A person cannot be appointed to be a director of an Ontario company unless that person has agreed to do so.  The Act provides that after an individual is elected as a director they must consent in writing to the appointment within ten days.  This written consent is inserted into the minute book for the Ontario company and maintained there for future reference.

Director Consent Example

Resident Canadian Requirement for Directors of Ontario Companies

There is a requirement for 25% of the directors of an Ontario company to be “resident Canadians”.  For more information about this requirement refer to Resident Canadian Requirements for Directors of Ontario Companies.

Ontario Business Corporations Act
13 Feb 2016

Resident Canadian Requirement for Directors of Ontario Companies

by | posted in: Directors, Incorporating in Ontario, Incorporation, Maintaining Your Company, Ontario, Ontario Business Corporations Act | 0

All Ontario companies must have at least one director and this person must be a resident Canadian as defined in the Business Corporations Act (Ontario).  Director(s) are the individuals who manage and supervise the business on behalf of the owners (shareholders).  The directors will also appoint officers to assist.

The Business Corporations Act (Ontario) provides for a residency requirement for directors.  25% of the directors of an Ontario company must be “resident Canadians” as defined by the Act.  This means that if an Ontario company has one to four directors, at least one of them must be a resident Canadian.

Definition of Resident Canadian

A resident Canadian is defined in the Act as an individual who is (a) a Canadian citizen ordinarily resident in Canada, (b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or (c) a permanent resident within the meaning of the Immigration and Refugee Protection Act (Canada) and ordinarily resident in Canada.

 

Meaning of the Definition of Resident Canadian

In lay terms, to be considered a “resident Canadian” pursuant to the Act, you must be a Canadian citizen living in Canada or a permanent resident living in Canada.  Therefore, if you are a Canadian citizen not living in Canada you would not qualify to be the sole director of a company, however, you could be a director as long as there were other directors elected to the board meeting the 25% resident Canadian requirement.  As well, a non-Canadian may not be the sole director of a company.

On the other hand, not all provinces and territories have the same rules.  In British Columbia the Business Corporations Act (British Columbia) does not provide for a residency requirement. Therefore a non-Canadian or a Canadian citizen not living in Canada may be the sole director of a BC company.  This is good news for those Canadians who wish to conduct business in Canada but also wish to live outside of Canada.  As well, foreign individuals are able to set up BC companies and act as the sole director of those companies since there is no requirement for them to live in Canada. Refer to our blog page for more information about residency requirements for BC companies.