Director rights and duties

This page explains the rights and duties of directors of Ontario nonprofit corporations. It is important that directors of nonprofit corporations know their rights and duties so they can serve their nonprofits better and avoid personal liability. Resource are not up to date for federal nonprofits.

What are the duties of a director?
As a director, you must always (Ontario’s Corporations Act s.127.1):

  • act honestly and do what would be best for the nonprofit corporation.
  • behave as any reasonable person would in the same situation.
  • follow the OCA and your nonprofit’s letters patent and bylaws.

You are responsible for following the OCA and other laws always. You cannot say that you are not responsible for breaking a rule because of what is in:

  • a contract,
  • your nonprofit’s bylaws, or
  • a board or members’ resolution.

NOTE: starting January 13, 2018

What can happen if I do not fulfill my duties as a director?
You can be sued as a director, so learn how to protect yourself from the costs of being sued as a director.

What are my rights as a director?
For a short summary of your rights as a director, see page 8 of Welcome Aboard!.

Can the board delegate its powers to an executive committee?
Sometimes.
This blog post explains which powers the board can delegate to an executive committee.

Can I be paid for my work as a director?
Yes, with some exceptions.
You can be paid as a director of a nonprofit so long as you are not a charity and it is allowed in the letters patent and bylaws. Read Payment of Director Fees (scroll down to p.3) for more information.

Who can be a director?
Directors must (Ontario’s Corporations Act s.286):

  • be 18 years of age or older
  • not be bankrupt
  • already be members or become members of the corporation within 10 days, however, they do not need to be members if your bylaws say directors do not have to be members.

Directors do not need to reside in Canada (see the 2nd FAQ).

Registered charities
If you are a director of a charity, you have additional duties. Charities also have stricter rules about who can become a director.

 

Reviewed: December 2017