The saying goes that when the United States sneezes, Canada gets a cold. Accordingly, when the most recent economic recession hit the United States, the financial health of many Canadian companies predictably suffered.

Advising directors of companies that are either insolvent or in the zone of insolvency regarding the scope of their personal liability can be an enormously daunting task as directors can be exposed to significant personal liability in a variety of areas of the law. Directors are now accountable not only to the corporation and its shareholders but also under certain circumstances to employees, creditors, customers, suppliers, and governments. The purpose of this article is to provide overview of the legal duties of directors and the personal liability that can be imposed and to discuss ways in which exposure to liability can be managed. It is not intended to provide legal advice to directors, or to be a comprehensive review of all of the duties and liabilities of directors.

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