Speaker: Craig Thorburn, Blake Cassels, Graydon This presentation looks at the start-up and administration of a business through a corporation with a focus on the efficient use of professional service providers, the management of the corporation through a board of directors and the relationships among shareholders of the corporation. Part of the CIBC Presents Entrepreneurship 101 lecture series. For more information including video, please visit: http://www.marsdd.com/Events/Event-Calendar/Ent101/2009/the-role-of-03252009.html

2. The Role of Boards, Advisory
Panels and Service Providers
MaRS Entrepreneurship 101
Craig C. Thorburn
Blake, Cassels & Graydon LLP
March 25, 2009

3. The Corporate Model
 Corporation
→ Separate legal person
→ Limited liability
 Triad
→ Shareholders
→ Directors
→ Officers
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4. Shareholders
 Shareholders
→ Election of Directors (also removal)
→ Appointment of Auditors
→ Entitlement to receive Dividends
→ Proceeds on Winding up
→ Approval of major changes
• sale of all or substantially all assets
• change of name
• change of articles of incorporation
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5. Directors
 Duty to Manage
→ “the directors shall manage, or supervise the management of,
the business and affairs of the corporation”
 Fiduciary Duty (Duty of Care)
→ Every director of a corporation in exercising powers and duties
shall
• “act honestly and in good faith with a view to the best
interests of the corporation”
• “exercise the care, diligence and skill that a reasonably
prudent person would exercise in comparable circumstances”
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6. Director Liabilities
 Directors are “jointly and severally” liable to restore to the corporation
any amounts distributed or paid and not otherwise recovered by the
corporation in certain circumstances for:
→ a purchase or redemption of shares
→ payment of a dividend
→ payment of an indemnity
 Directors also liable in certain circumstances for:
→ unpaid wages of employees
→ unpaid income tax remittances
→ failure to make withholding tax payments
→ unpaid PST and GST
→ environmental liabilities
→ criminal offences
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7. Director Protections
 Due Diligence
 Reliance on expert reports
 D&O Insurance
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8. Officers
 Same duty of care as directors
 Few statutory liabilities
 Risk/Reward Mismatch
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9. Advisory Panels
Expertise for corporation

No liability for panel members

Diversity of skills and views

Don’t select people in your own image

Angels

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10. Service Providers
Accountants

Lawyers

Investment bankers

Advertising agencies

MaRS

→ Business Mentorship and Entrepreneurship Program
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