Director’s personal liability: what company debts are you personally liable for?
Par l’équipe BRESSE Syndics | Mis à jour : mai 2026 | Lecture : 8 min | Responsabilité administrateur Québec, DAS TPS TVQ administrateur, cautionnement personnel dirigeant, protéger patrimoine entrepreneur
You incorporated your company precisely to protect your personal assets. The principle is clear in Canadian and Quebec law: a corporation is a legal entity distinct from its directors and shareholders. However, in certain situations, this boundary becomes blurred – and your home, RRSPs and personal savings may be at stake.
This article provides a comprehensive, plain-language overview of the personal liabilities you incur as a company director in Quebec – and the concrete steps you can take to limit them.
The principle: separation between the company and its directors
In Quebec and Canada, a business corporation (inc., ltée) incorporated under the Canada Business Corporations Act (CBCA) or the Quebec Business Corporations Act (QBCA) is a legal entity distinct from its directors. In principle, creditors can only claim payment of the company’s debts from the company itself.
In principle only: The law provides for several important exceptions in which the director’s personal liability may be engaged. Knowing these is essential for any company director.
The 5 categories of debt for which a director is personally liable in Quebec
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Source deductions not remitted to the government (federal and provincial DAS)
Income tax deducted from employee pay, employment insurance, Quebec Pension Plan (QPP) and Canada Pension Plan (CPP) contributions must be remitted to the government. If the company has collected them but not paid them by the date they became due, the directors in office are personally liable.
This debt ranks first with respect to the company’s assets, ahead of all other claims, including those of secured creditors. The Canada Revenue Agency (CRA) and Revenu Québec can claim these amounts directly from the directors.
Important: CRA and Revenu Québec do not prorate. If you are one of three directors, they can claim 100% of the debt from each of you individually, and then you can work it out among yourselves.
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GST and QST collected and not remitted
When your company sells products or services, it acts as the government’s agent to collect GST and QST. These amounts do not belong to your company – they belong to the government. If they are not paid, the directors are personally liable, just as they are for DAS.
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Unpaid employee wages and vacation pay
When cash flow is low, some managers let their employees work in the hope of being paid later. If these wages and vacation pay are never paid, employees can file claims directly against the directors. The Quebec Business Corporations Act provides for this liability, capped at six months’ unpaid wages.
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Personal guarantees signed in favor of secured creditors
It’s the most common personal debt – and the one most often overlooked. To obtain a line of credit, a commercial loan or equipment financing, your financial institution almost always requires a personal guarantee from management. If the company fails to pay, the creditor will enforce the personal guarantee.
These guarantees can involve substantial sums – often more than the company’s actual principal debt. Always make an inventory of signed guarantees before restructuring.
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CNESST contributions and other statutory contributions
Contributions to the Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST), certain pension plan contributions and certain environmental obligations may also engage the personal liability of directors in Quebec.
How much are your personal assets at risk? A concrete example
Let’s take a Quebec SME that closes with :
■ $60,000 in unremitted SARs over the past 6 months.
■ $35,000 GST/QST collected but not paid.
■ $18,000 in unpaid vacation wages to 4 employees.
■ $250,000 line of credit personally guaranteed by both directors.
Total debts potentially claimed personally from directors: $363,000. And this, even if the company had been duly incorporated and the directors had acted in good faith.
How to limit – and resolve – your personal liability as a director
Acting at the right time: timing is everything
The longer you wait, the more personal debt you accumulate. Continuing to operate an insolvent business mechanically increases the directors’ personal debt – each additional month of unpaid wages, unremitted GST/QST, withheld but unpaid DAS adds to your exposure.
Resigning from the Board is not always enough
A director’s resignation releases him or her only for the future, and only within certain limits. For debts accumulated prior to resignation, personal liability remains. A strategic resignation should be planned with a trustee and, if necessary, a lawyer.
The proposal may release you from certain directors’ responsibilities
A homologated proposal can relieve directors of their personal liability for GST and QST. This is one of the major strategic benefits of this procedure, often decisive in the choice between proposal and bankruptcy.
A consumer proposal or personal bankruptcy to manage what’s left
If you remain exposed to personal debts after the end of the business – DAS, bank guarantees, card balances – a consumer proposal or personal bankruptcy allows you to settle these residual obligations in a single, structured procedure.
A two-pronged approach: At BRESSE, we regularly work with managers on both fronts simultaneously: restructuring or closing down the company, and protecting their personal assets. This dual approach is essential when you are both shareholder and director.
Are you a director of a company in difficulty? Consult a trustee in Quebec City free of charge
The earlier you consult us, the better protected your personal assets will be. Free, confidential, no-obligation initial consultation – in person in Quebec City, by telephone or videoconference.
To book an appointment: bresse.com | 1 844 890-6767
BRESSE Syndics – Licensed Insolvency Trustees – Greater Quebec City Area – 40 years of experience working with business leaders
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