NetNews Usenet Archive 1992 #31/NN_1992_31.iso/spool/ont/general/2342

Internet Message Format | 1992-12-23 | 2.8 KB

Path: sparky!uunet!uunet.ca!ecicrl!clewis
From: [e-mail] (Chris Lewis)
Newsgroups: ont.general
Subject: Re: Tax evasion!!
Message-ID: <[e-mail]>
Date: 23 Dec 92 04:58:40 GMT
References: <[e-mail]> <[e-mail]> <[e-mail]>
Distribution: can
Organization: Elegant Communications Inc., Ottawa, Canada
Lines: 45

In article <[e-mail]> [e-mail] (Tom Haapanen) writes:
>[e-mail] (Tom G. Lovie) writes:
>> The main reason for incorporating is to separate your own assets from that
>> of the companies assets (corporations assets...).  If there is a chance
>> that your company could be held liable for large sums of money, then
>> whether or not you are making anything, you should be incorporated.  That
>> way, if you are in the position of being sued (for any number of reason,
>> copyright infringement comes to mind...) then your own assets (house,
>> bank account etc... aren't on the line)

>Do note, though, that while a corporation limits a *SHAREHOLDER's* liabi-
>lity to his/her investment in the company (ie the creditors can not
>repossess a shareholder's personal assets), it does not protect a *DIRECTOR*
>or *OFFICER* of the company.  A corporation's directors and officers (which,
>in the case of a one-person company, are usually the same person as the
>shareholder) can be held legally liable for the company's actions.

>I don't know the exact circumstances under which directors and officers may
>be held liable (please consult your lawyer on this one!), but do remember
>that having a corporation does not give you a license to do whatever you
>want without any risk of personal liability.

If I remember my research correctly, a limited corporation's directors and
officers are not personally responsible for normal business losses or
third party liability (as in lawsuits over accidents etc), EXCEPT where
the law says otherwise.  These exceptions tend to be related to employee
salaries, taxes, corporation law etc.  There are some new exceptions in
environmental legislation too.

For example, if a company doesn't remit UIC or WCB properly for its employees,
the directors can end up footing the bill *directly*, plus pay the fines.

The officers of a bankrupt company in arrears on employee salaries are
routinely held responsible for the shortfall, regardless of investment level.

Violations of the Corporations Act also tend to hit the directors/officers
rather than the company itself.

[I was administrative VP of a non-profit organization, and had to use
this stuff as a stick to get the rest of the officers to clean up their
acts and get the books in order.]
--
Chris Lewis; [e-mail]; Phone: Canada 613 832-0541
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