Resident Director

In Canada, what are the responsibilities of a nominee and resident director?

Directors in Canada are individuals whose primary role is to oversee the company's operations to make the best judgments possible for the company's long-term success. A Federal corporation must have at least one director in Canada as a general rule. However, the minimum number of directors, including the nominee director in Canada, can be influenced by the legal form under which the firm will operate.

On the other hand, the number of directors is not fixed and can be changed by revising the company's statutory instruments. According to the Government of Canada, if this is the case, the corporation must notify the official institutions of the new changes. In terms of the minimal prerequisites for a Canadian director, here’s what is recommended:

• In Canada, the resident director or nominee director must be at least 18 years old.
• The legislation on directors and nominee directors in most Canadian jurisdictions imposes residency requirements, in the sense that at least 25% of the directors must have Canadian residency, but this requirement no longer applies in the province of Ontario, which means that directors of Ontario companies do not have to meet any residency requirements as of July 2021.
• On a national level, (federal) firms with less than four directors must have at least one Canadian resident, however in Ontario, local companies do not have to follow this requirement under the new law of 2021.
• If the board of directors of a company operating in a specialty industry, such as video sales or video distribution, is made up of two directors, at least half of the directors must be Canadian residents.
• In the situation of a nominee director in Canada who's been elected by the shareholders' meeting but is not present at the meeting, the nominee must provide written consent to the election within ten days of the decision being made.

The requirement that a board of directors have a minimum of 25% Canadian residency was imposed on Alberta, Saskatchewan, Federal Canada, Newfoundland, and Manitoba. But, the law that went into effect in July 2021 eliminated the residency requirements for directors of Canadian companies registered in Ontario; however, the residency requirements still apply to all other Canadian provinces. If you want to invest in any of these places, our team of Canadian company formation advisors can provide more information. Still, you can also rely on us if you need advice on creating a business in other Canadian regions, such as Nova Scotia or Quebec.

Who is a nominee director?

In Canada, a nominee director is a person who is appointed to function as the company's director (or one of the company's directors) by one of the company's shareholders. In Canada, the nominee director might also be one of the company's employees. Even if the nominated director is appointed by one of the shareholders, the director's fiduciary duty is to the company's whole shareholding structure, not just the person who made the nomination. In general, the following are some of the critical responsibilities of the nominee director in Canada:

• supervising the company's activities and ensuring that the company's policies are followed.
• Although the candidate does not represent an executive director, they must be involved in the company's decision-making process in specified areas.
• In Canada, the nominee director is likewise expected to keep confidential the materials to which they have access.
• It should be highlighted that if a director has access to sensitive records, they should not divulge such material to their nominating shareholder, as the information does not have to be shared with the shareholder.
• In many business matters, the nominee director may consult with their nominating shareholder.

Please get in touch with our team for additional information on how to designate a nominee director in Canada. Our Canadian company registration advisors can assist you in appointing resident directors and provide more information on the management structure of a Canadian corporation.