Director And Officer Responsibilities: Alberta Corporations
Every corporation in Alberta relies on strong leadership to operate effectively—and legally. Directors and officers play a critical role in ensuring that the business complies with its legal obligations, acts in the best interests of the company, and maintains sound governance.
However, the responsibilities that come with these roles are not always well understood. Failing to follow the proper standards can expose directors, officers, and even shareholders to unnecessary risk. This guide breaks down director and officer responsibilities in Alberta, helping you understand what’s required and how to protect yourself and your corporation.
What Are Directors and Officers?
In simple terms:
- Directors are elected by shareholders to oversee the corporation’s overall direction and strategic decisions.
- Officers are appointed by the board of directors to handle the day-to-day management and implementation of those decisions.
Both roles are vital for ensuring a corporation operates within the law and in the best interest of its shareholders.
If your corporation’s structure or governance documents are unclear about these roles, reviewing your corporate bylaws can help clarify responsibilities and ensure accountability.
Directors vs. Officers: What’s the Difference?
While both positions are part of corporate leadership, their duties differ in scope and authority:
| Role | Primary Focus | Responsibilities |
| Directors | Oversight & strategy | Setting corporate policies, approving budgets, declaring dividends, hiring or removing officers |
| Officers | Day-to-day operations | Managing employees, executing board decisions, handling contracts, and financial reporting |
In essence, directors steer, and officers drive. However, both must act in good faith and uphold their legal obligations under Alberta’s Business Corporations Act (ABCA).
Key Responsibilities Under Alberta Law
Serving as a director or officer isn’t just an honorary title—it carries real, legally enforceable duties. In Alberta, these responsibilities are supported by case law that reinforces the expectation of honesty, prudence, and loyalty.
1. Fiduciary Duty
Directors and officers must always act in good faith and in the best interests of the corporation, not for personal gain. This includes avoiding conflicts of interest, disclosing any potential conflicts to the board, and ensuring all decisions serve the company’s long-term success.
Example: A director who approves a contract with a company they own without proper disclosure may be found to have breached their fiduciary duty, even if the deal was fair.
How to meet this duty:
- Disclose all potential conflicts in writing.
- Abstain from voting on matters where you have a personal interest.
- Keep corporate decisions transparent and well-documented in meeting minutes.
2. Duty of Care
This duty requires directors and officers to act with the care, diligence, and skill that a reasonably prudent person would exercise in similar circumstances. In practice, this means taking the time to review materials before meetings, asking questions, and staying informed about the corporation’s financial health and risks.
How to meet this duty:
- Attend all board meetings and remain active in discussions.
- Request and review financial statements regularly.
- Rely on expert advice (such as accountants or legal counsel) when necessary, and record that reliance in the minutes.
3. Compliance and Legal Oversight
Directors and officers are responsible for ensuring the corporation follows applicable laws and regulations—including corporate filings, employment standards, privacy legislation, and environmental laws.
How to meet this duty:
- File annual returns and maintain a complete minute book.
- Stay up to date with changes to the ABCA and other legislation.
- Ensure the corporation’s bylaws and governance documents reflect current laws and internal processes.
4. Financial Management and Transparency
Alberta law requires directors to prevent improper payments or distributions that could harm creditors or shareholders. They must also ensure accurate record keeping, including accounting and audit oversight.
How to meet this duty:
- Approve budgets and financial statements only after proper review.
- Avoid declaring dividends unless the corporation is solvent.
- Implement clear internal financial controls and ensure officer accountability.
5. Record Keeping and Corporate Governance
Effective governance relies on accurate documentation. Directors must ensure that meeting minutes, resolutions, and corporate registers are kept up to date and stored securely.
How to meet this duty:
- Maintain a current minute book.
- Regularly update corporate bylaws and resolutions.
- Review key policies annually to ensure they reflect business realities.
Liabilities and Risks for Directors and Officers
Even with the best intentions, directors and officers can face personal liability if their duties aren’t fulfilled properly. The Alberta courts hold corporate leaders accountable when their decisions—or lack of oversight—cause harm or breach statutory obligations.
1. Personal Financial Liability
Directors can be personally liable for certain unpaid debts, including:
- Up to six months of unpaid employee wages
- Unremitted source deductions or GST owed to the Canada Revenue Agency
- Environmental cleanup costs under certain regulatory frameworks
How to reduce risk:
Implement internal systems to monitor payments and filings, and document compliance efforts. When possible, purchase Directors and Officers (D&O) liability insurance to protect against claims.
2. Liability for Breach of Duty
If a director or officer acts in bad faith, misuses corporate funds, or fails to disclose a conflict of interest, they may face civil action or regulatory penalties.
How to reduce risk:
- Record every major decision in the board minutes, along with the rationale.
- Seek independent legal advice if uncertain about potential conflicts.
- Adopt clear internal ethics and disclosure policies.
3. Liability for Inaction
Doing nothing can be just as risky as making a bad decision. Courts have found directors liable for failing to act when they knew—or should have known—about wrongdoing or non-compliance within the corporation.
How to reduce risk:
Stay informed and engaged. If an officer or fellow director acts improperly, document your dissent or steps taken to address the issue. Alberta law recognizes directors who act responsibly, even if they’re in the minority.
4. Criminal and Regulatory Exposure
In certain cases, directors or officers can face criminal liability for serious offences such as fraud, insider trading, or environmental violations.
How to reduce risk:
Create a compliance culture within your organization. Regular training, legal oversight, and transparent communication help prevent these risks before they escalate.
The Role of Corporate Bylaws in Defining Responsibilities
Corporate bylaws are the cornerstone of internal governance. They define how directors and officers are appointed, what powers they have, and how they can be removed.
When bylaws are missing or outdated, leadership roles can become blurred—leading to inefficiency or disputes. Aligning your bylaws with your shareholders’ agreement or unanimous shareholders agreement ensures clarity across all corporate documents.
How to Protect Yourself as a Director or Officer
- Stay informed: Understand your obligations under Alberta’s Business Corporations Act.
- Keep records current: Ensure corporate filings, meeting minutes, and bylaws are up to date.
- Review corporate documents regularly: Governance documents should evolve as your business grows.
- Seek legal advice: Working with a corporate lawyer ensures your responsibilities and liabilities are clearly defined—and your corporation stays compliant.
FAQs
Are directors and officers personally liable for corporate debts?
Generally, no—but in Alberta, they may be personally responsible for unpaid wages, tax remittances, or wrongful acts committed in bad faith.
Can the same person be both a director and an officer?
Yes. In many small or family-owned corporations, one person may serve in multiple roles. The key is to clearly define their authority in the bylaws.
How often should a corporation review director and officer responsibilities?
It’s best to review them whenever bylaws are updated or the corporation undergoes major changes, such as restructuring or adding shareholders.
Conclusion
Understanding director and officer responsibilities is essential to maintaining strong governance and avoiding personal liability. In Alberta, these roles carry both authority and accountability—ensuring the corporation operates ethically and in compliance with the law.
Clear governance documents, well-defined bylaws, and informed leadership protect not only the corporation but also the individuals behind it.
If it’s been a while since your corporate structure or bylaws were reviewed, now is the time to ensure your responsibilities are clearly defined and your governance framework supports your long-term goals.