Shareholder vs. Director vs. Officer

A corporation is a separate legal person, so it acts through people in defined roles. Shareholders own it, directors govern it and officers run it. In Ontario the roles are set out in the Ontario Business Corporations Act (OBCA); federal corporations follow parallel rules in the Canada Business Corporations Act (CBCA).

A shareholder owns one or more shares. Ownership comes from the corporation issuing shares, or from a transfer recorded in its securities register, not from a job title or from having founded the business. A co-founder who was promised shares that were never issued is not yet a shareholder of record.

Shareholders do not run the business. Their power is the vote. Under the OBCA they elect directors by ordinary resolution and can remove them the same way (sections 119 and 122), can confirm, reject or amend by-laws the board makes (section 116), and must approve fundamental changes, such as amending the articles or selling substantially all the assets, by special resolution. They are also entitled to inspect certain records, receive financial statements and apply for remedies such as the oppression remedy.

As shareholders, they are not liable for the corporation's debts except in a few listed cases (section 92). For owner-operators, the real exposure usually comes from a personal guarantee signed for a lease or loan, not from owning shares.

Two agreements change this picture. An ordinary shareholder agreement governs relations among the owners. A unanimous shareholder agreement can go further and restrict the directors' powers; to that extent the shareholders take on the directors' rights, duties and liabilities and the directors are relieved of them (subsection 108(5)).

Under section 115, the directors manage or supervise the management of the corporation's business and affairs, subject to any unanimous shareholder agreement. A private corporation needs at least one director. Under section 118, a director must be an individual, at least 18, not found incapable of managing property and not bankrupt. A director need not own shares unless the articles require it, and since July 5, 2021 an Ontario director need not be a Canadian resident. Federal CBCA corporations still need at least 25% resident Canadian directors. A new director must consent in writing, normally within 10 days of election or appointment (section 119).

The board acts collectively, at meetings or by written resolutions signed by all directors (section 129). Core decisions belong to it: declaring dividends, buying back shares, adopting by-laws, submitting matters to shareholders and setting the terms on which shares are issued. Those powers cannot be handed to officers (section 133) or to a committee or managing director (subsection 127(3)).

Every director owes the directors' duties of loyalty and care in section 134. Directors also carry statutory personal exposure that shareholders and officers do not: up to six months' unpaid wages and 12 months' vacation pay under section 131, unremitted payroll source deductions under section 227.1 of the Income Tax Act and unremitted GST/HST under section 323 of the Excise Tax Act. The tax provisions include a due diligence defence and a two-year limit after the person ceases to be a director. Our entry on directors' liability covers these in detail.

Section 133 lets the directors designate offices, appoint officers, specify their duties and delegate powers to manage the business, subject to the articles, by-laws and any unanimous shareholder agreement. The OBCA's definition of officer includes the chair, president, vice-presidents, secretary, treasurer and general manager, anyone the by-laws or a board resolution designate as an officer, and anyone who performs similar functions. Titles such as CEO or COO are business usage; what counts is the appointment and the authority delegated.

The Act does not require any particular office, so the by-laws decide which offices exist. A director may also be an officer, and one person may hold two or more offices.

Officers owe the same section 134 duties as directors, but they are not directors. The statutory liabilities for wages, source deductions and GST/HST attach to directors, so a non-director officer has less statutory exposure, while remaining responsible for breaches of duty and their own wrongful acts. Outsiders dealing with an officer may generally rely on the officer's apparent authority and assume internal approvals were given, under the indoor management rule. Stepping down is covered in our guide to resigning as an officer of an Ontario corporation.

In many small Ontario corporations, the founder is the sole shareholder, the sole director and the president. The law still treats these as three separate capacities, and keeping them apart protects the founder.

• Decide in the right capacity. A sole director signs directors' resolutions and a sole shareholder signs shareholders' resolutions; a sole director can also constitute a meeting.
• Sign as an officer. Sign contracts in the corporation's name, followed by your name and title, such as "per: Priya Shah, President". Signing in your own name can make the contract yours.
• Get paid in the right capacity. Salary is paid for work as an employee or officer; dividends are paid on shares.
• Leaving one role does not end the others. A director's resignation does not transfer shares or end an office; each role has to be ended separately. A first director named in the articles cannot resign before the first shareholders' meeting unless a successor is in place.
• File the change. Changes to directors or to the senior officers on file must be reported by Notice of Change within 15 days under the Corporations Information Act.

A sole owner cannot escape director liability by resigning and carrying on: if every director resigns, anyone who manages the business is deemed a director (subsection 115(4)). Our guide to director resignation in Ontario covers the steps and the liabilities that survive.

Tomás Rivera and Grace Liu own Bronte Kitchen Design Inc., an Oakville OBCA corporation whose articles allow one to ten directors. Tomás holds 70% of the shares and is a director and president. Grace holds 30% and is a director and secretary-treasurer.

In March 2026, Grace steps back from the business. She delivers a written resignation as director and as secretary-treasurer, effective March 31. Before it takes effect, both directors sign a resolution appointing Tomás secretary and, using a power the shareholders gave the board by special resolution, reducing the board to one director. The corporation files a Notice of Change within 15 days, and the bank removes Grace's signing authority. Grace keeps her 30% of the shares, so she still votes, still receives dividends declared on her shares, and must be notified of any majority written resolution she does not sign.

In September, the CRA assesses the corporation for $22,000 of unremitted payroll source deductions. About $9,000 relates to payrolls and remittance deadlines that fell while Grace was still a director. The CRA can pursue her personally for that portion only if it cannot collect from the corporation or the corporation is wound up or bankrupt, only within two years after she ceased to be a director, and subject to her due diligence defence. Tomás, a director throughout, is exposed for the full amount. The corporation pays the assessment from a receivable it collects in October, so neither pays personally, but the episode shows that resigning ends future exposure, not past exposure.