A company can have important financial obligations when it is experiencing financial problems.
How it works
A company’s financial problems can have major consequences for its directors and officers, even if the company is incorporated. Financial institutions will usually require them to be personally responsible for a debt owed by the company. Moreover, the law holds a company’s director personally liable for up to six months of unpaid wages, as well as unremitted sales tax, payroll deductions, CNESST premiums and, in certain cases, taxes owed by the company.
When a company decides to restructure itself, close attention must be given to the consequences on directors’ and shareholders’ responsibilities. Different options will have different impacts. These can be discussed and assessed right from the start.
If restructuring is not possible, bankruptcy will be the only solution. Directors and officers should also seek advice about their personal finances, because not only will they lose their livelihoods, they will also be responsible for part of the company’s debts. These debts, however, can be included in a consumer proposal or bankruptcy.
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