Officers’ Duties and Responsibilities Within a Canadian Private Corporation
There is a common breakdown of managerial power and control distributed within the organization of Canadian Private Corporations. Directors are in place to manage and supervise the business and affairs of the corporation, while shareholders are the so called ‘owners’ where they are the residual claimants to the assets of the corporation, vote on proposals, and elect directors. Finally, there are the officers, who essentially service the board of directors and act as the operational machines that actively handle the day-to-day of the business.
A common question is whether it is necessary to appoint officers, and if so, what roles and obligations must they shoulder. As stated under s. 133 and s. 121 of the Canada Business Corporations Act (“CBCA”), the elected board of directors within a Canadian corporation, are obligated to:
- designate specific offices for the corporation;
- appoint individuals to fill each office; and
- lay out the duties and powers of each officer as they manage the business and affairs of the business under the supervision of the directors.
More specifically, under s. 289 of the Corporations Act, 1990 (“CA”), the board of directors are required to appoint a current director to hold the position of President of the corporation, as well as appoint a Secretary for the corporation, who can be any individual above the age of 18, and with a competent mind. In fact, a corporate officer is a fundamental role that must be filled in order to ensure the business can run smoothly.
As a president, this person will be responsible for the daily operations of the corporation and are obliged to report the progress of such operations to the board of directors. The officer will have the influence to determine the direction of the business and if there is no Chairman of the board of directors elected, the President will be obliged to oversee all meetings of shareholders and directors. The president, together with the secretary of the corporation must also sign all share certificates that are issued to the shareholders of the corporation; subject to the company’s by-law provisions.
A secretary is an executive officer of a corporation who is responsible for maintaining records. This officer will attend all meetings of the board, shareholders and committees; and then record the specifics of each meeting. They will also have the obligation of drafting and distributing notices to shareholders, directors, auditors, and members of committees, when instructed and necessary. A Secretary will be the keeper of the corporate seal, the corporate minute book, and all other books, papers, records, documents, and instruments that belong to the Corporation.
Although not required by law, another office position that is commonly found in a corporation, is a treasurer. A treasurer is an executive officer of a corporation responsible for supervising the accounting functions and keeping current financial records. In addition, the treasurer holds the duty of maintaining proper accounting records in compliance with the CA and CBCA. This officer will be consistently depositing funds into the corporation’s bank account, arranging the banking provisions on behalf of the company, safekeeping the securities and disbursement of funds of the corporation; and rendering to the board of directors an account of the business’s financial position.
While the offices of the corporation and the duties associated with those offices are normally outlined within the company’s by-law provisions and in the shareholders agreement, there are additional fiduciary duties that all officers within a Canadian corporation must observe and adhere to. Such include, the duty of care, duty to act on behalf of the corporation’s best interest, and the duty to comply with all the regulations, articles, bylaws, unanimous shareholder agreement, and provincial and federal laws in Canada (CBCA s. 122). Every officer must act honestly and in good faith for the corporation and exercise their responsibilities with care and diligence.
In other words, although the positions of shareholders and directors are often the most focused on appointments, selecting the right individuals to become an officer is imperative and requires a good deal of deliberation for positive future results for the business.
For more information on officer responsibilities under CBCA, contact a corporate lawyer at Kalfa Law Firm.
© Kalfa Law Firm 2021
The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.
