Director and officer resignations

In a share purchase the buyer takes over the company itself, so the buyer can ask the outgoing directors and officers to sign letters ending their roles. Check that the closing agenda lists these resignations alongside items such as the share certificates and the minute book. Two questions matter: when each resignation takes effect, and who must be told about the change.

When a resignation takes effect

Under the federal Canada Business Corporations Act, a director’s resignation becomes effective when a written resignation is sent to the corporation, or at the time the resignation specifies, whichever is later (s. 108(2)). Ontario’s Business Corporations Act (s. 121(2)) uses the time the written resignation is received by the corporation instead. Each lets the letter name a later time, such as the moment of closing. Those sections address directors, so confirm how the company’s by-laws handle officers.

Telling the registry

• A federal corporation must, within fifteen days after a change is made among its directors, send the Director appointed under the Act a notice setting out the change (CBCA s. 113(1)).
• Subject to the exceptions in s. 4, an Ontario corporation must file a notice of change with the Minister within 15 days after the day the change takes place (Corporations Information Act, s. 4(1)).
• Other provinces run their own corporate Acts and filing rules, so check the statute of the province of incorporation.

Pair the letters with the new board’s directors’ resolution and see what else changes hands in the corporate seal and minute book answer.