Directors’ And Officers’ Liability

Originally published in The Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada.

Important developments have taken place in Canada over the past year regarding the potential for directors and officers to incur liability, specifically in the areas of (i) timely disclosure obligations; (ii) the duties of directors and officers in the context of a company that is up for sale; and (iii) the ability of directors and officers to receive indemnification payments from the companies they serve. Each of these topics is discussed in detail along with a brief update on civil statutory liability for continuous disclosure violations.

Timely Disclosure Obligations

Canadian securities laws impose obligations on a publicly traded issuer (and, in effect, its directors and officers) to immediately disclose any material changes regarding the issuer (often referred to as "timely disclosure obligations"). A "material change" is defined under Ontario securities laws as a