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Frequently asked questions > Company > Business Corporation > Can a director be sued personally?

Can a director be sued personally?

Yes, under certain circumstances. A corporation has a legal personality distinct from that of its directors. Therefore, legal actions arising from the company's activities are generally brought against the corporation itself.

This distinction regarding the company's legal personality does not, however, protect the director from all personal liability. Depending on the circumstances, certain laws, including corporate law, may directly impose obligations on the director or stipulate their liability for certain sums owed by the company. The director may also be held liable for their own acts or omissions.

A director may be subject to personal liability, particularly when a law expressly provides for their responsibility or when their conduct as a director constitutes a fault that has caused harm. The conditions for establishing this liability vary depending on the nature of the obligation, the facts, and the applicable law.

The mere fact that a company is experiencing financial difficulties, unable to pay a debt, or is the subject of legal proceedings does not automatically mean that its directors become liable for the company's debts or liabilities. A director's personal liability must be based on a specific legal basis.

To reduce the risks associated with performing their duties, a director should, in particular:

  • to act with prudence, diligence, honesty and loyalty;
  • to have the relevant information before making an important decision;
  • to comply with the obligations imposed on it by applicable laws;
  • identify and properly manage situations of conflict of interest;
  • to ensure that important council decisions are adequately documented.

Depending on the situation, particularly when deemed necessary to protect directors in the course of the company's activities, the company may also take out directors' and officers' liability insurance. However, the scope of this protection depends on the insurance policy and the circumstances giving rise to the claim.

In summary , a director is not automatically liable for the company's obligations and debts, but they can be held personally liable when provided for by law or when their own acts or omissions may give rise to liability. The nature and extent of this liability must be assessed on a case-by-case basis.

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