Conflict of Interest Rules for Board Directors in Canada

A Canadian director with an interest in a material contract or transaction may have to disclose the nature and extent of that interest and refrain from voting. The exact trigger, timing, exceptions, quorum rule and remedy come from the statute governing the organization. A board policy can add safeguards, but it cannot replace the statutory process. A federal business corporation, provincial corporation, federal nonprofit, society, co-operative, condominium corporation and charity can each face a different regime. Start with the incorporating statute, sector legislation, articles, bylaws and any unanimous shareholder or member agreement. This article uses section 120 of the Canada Business Corporations Act (CBCA) as a concrete example. It should not be copied into another organization’s minutes without checking that organization’s law.