Director - Re: Change of (Corporate Law)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-04-26
CLNP Page ID:	1766
Page Categories:	[Corporate Law]
Citation:	Director - Re: Change of (Corporate Law), CLNP 1766, <4C>, retrieved on 2024-04-26
Editor:	MKent
Last Updated:	2021/10/08

Corporations Information Act, R.S.O. 1990, c. C.39

4 (1) Every corporation shall file with the Minister a notice of change for every change in the information filed under this Act, within 15 days after the day the change takes place. 2007, c. 11, Sched. B, s. 1 (3).

(2) The notice of change shall set out the prescribed information and shall specify any changes that have taken place and the dates of the changes. 2007, c. 11, Sched. B, s. 1 (3).

(3) It is not necessary to file a notice of change in respect of a director’s retirement and subsequent re-election for the next term of office. 2007, c. 11, Sched. B, s. 1 (3).

(4) A corporation incorporated under the laws of Ontario that changes only its name does not need to file a notice of change. 2007, c. 11, Sched. B, s. 1 (3).

Marra v. The Queen, 2016 TCC 24 (CanLII)

[28] On their return to Toronto, Ms. Marra “did not follow up” the resignation, assuming Mr. Polsinelli had taken care of it. The Marras never followed up anything with Mr. Polsinelli, she said. No other director of Sani‑Clean was informed of Ms. Marra’s resignation. Apparently, according to Mr. Marra, the only director was Mr. Manankil who was being sued by the Marras and Sani‑Clean. (There is no evidence when or if Ms. Sili resigned as director.) No Notice of Change of Directors was sent as required by the Ontario Corporations Information Act (“OCIA”).

...

[43] Subsection 4(1) of the OCIA states that

(1) Every corporation shall file with the Minister a notice of change for every change in the information filed under this Act, within 15 days after the day the change takes place.[4]

[44] Failure to file a notice of change of director does not negate the change of director or director’s resignation; Laprise v. Julio’s Pizza & Spaghetti Parlour. The consequences for failing to file such notice may include penalties and fines.

[45] The issue these appeals are concerned with is did Sani‑Clean receive Ms. Marra’s resignation on January 11, 2007, or, on the facts, is receipt of a letter of resignation by a lawyer for the corporation receipt of the resignation by the corporation? The alternative submission by the appellant was whether she was duly diligent in preventing Sani‑Clean’s failures to remit tax.

[46] In January 2007, the Marras and Sani‑Clean were involved with legal action against Mr. Manankil, who, along with Ms. Sili, were the two directors of Sani‑Clean. Ms. Sili, according to the appellant, was not an active director and was not involved in the operation of Sani‑Clean. Therefore, the appellant claims, it would be useless to send the letter of resignation to a director against whom you have taken legal action or to a director who had absolutely no involvement with the company. Mr. Polsinelli advised Ms. Marra to send the letter of resignation to him. In the appellant’s view the delivery of the letter of resignation to Mr. Polsinelli as corporate counsel was the best available method to notify Sani‑Clean of her resignation.

[47] Counsel referred to Hart v. Lefebvre where Mesbur J. of the Ontario Superior Court of Justice considered section 108 of the Canada Business Corporation Act, that resignation of a director is effective at the time a written resignation is sent to a corporation. There is no requirement where the resignation is to be sent and the trial judge assumed “the underlying principle is one of notice or meaningful communication with the corporation”. In Hart, the letter of resignation was sent to the Trustee in bankruptcy which, the trial judge found, “was the best available method for the defendant to actually notify the corporation” since “the Trustee was the only entity with any remaining connection to or for the corporation”. The trial judge therefore held that the letter of resignation sent to the Trustee on May 17, 1991 was effectively sent to the corporation on that date and the date of resignation was May 17, 1991.

(...)

[51] So let’s be practical, look at the law and put ourselves in Ms. Marra’s shoes. Her husband tells her there is trouble with Sani‑Clean and that she may be liable on account of these problems, and that she should get in touch with their lawyer who is also Sani‑Clean’s lawyer. The lawyer tells her she has to resign. She could send a letter of resignation to either of the two remaining directors, one is Ms. Sili who probably has no idea what is occurring. The other director is Mr. Manankil who is being sued by the Marras and Sani‑Clean. He also has jumped ship as far as Sani‑Clean is concerned. No comfort would be gained in sending the letter of resignation to him.

[52] The only alternative, therefore, is to send the letter of resignation to the lawyer who has always acted for Sani‑Clean and who has, or should have, possession of Sani‑Clean’s corporate records. This is not necessarily a question of whether Mr. Polsinelli is agent of Sani‑Clean; it is a question of wanting to resign as director and sending the letter of resignation to the person who has any remaining responsible connection with Sani‑Clean and, in the circumstances, that was Mr. Polsinelli, Sani‑Clean’s lawyer.

[53] Ms. Marra’s letter of resignation as director of Sani‑Clean was effective as at the date it was received by Mr. Polsinelli. There is no reason to consider the appellant’s alternate submission that she exercised the degree of care, diligence and skill to prevent Sani‑Clean’s failures to remit tax.