Corporate Directors' Disqualification: The New Canadian Regime?
37 Pages Posted: 20 Feb 2009 Last revised: 26 Sep 2010
Date Written: July 2, 2009
An insolvent time in a corporation’s life may compel directors to engage in reckless behaviour and wrongful conduct to hide the state of financial distress from creditors as the directors attempt to trade out of insolvency. Currently, Canadian legislation does little to protect from this type of situation. In this article, the author examines the different schemes in the United Kingdom, specifically directors’ personal liability and the director disqualification scheme, and argues that the disqualification scheme has been more successful for protecting creditors. The author then considers the Canadian provisions currently in place and concludes that the adoption of a disqualification scheme, especially under the federal insolvency power, should be seriously considered.
Keywords: corporate directors, disqualification, director liability, oppression remedy, insolvent trading, bankruptcy, insolvency, corporate insolvency, unfit directors
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