Resigning as a Director of a BC Company: How to Do It and Why the Filing Matters

Leaving the board of a BC company takes one document: a written resignation delivered to the company. The harder part often comes afterwards, when the company has to update the public register and the departing director has no control over whether it does.

This article explains how to resign, when the resignation takes effect, how to get your name off the register if the company does not file, and which liabilities can still reach you once you have gone.

Put your resignation in writing

Under section 128 of the Business Corporations Act, a director stops holding office when their term ends, on death, on removal, or on resigning. The Act speaks of a written resignation, so a remark at a meeting is a poor substitute. A short signed letter is enough. It should:

• Name the company exactly as it appears on the BC Registry, with its incorporation number.
• Say you resign as a director, and, if you also hold an office such as president or secretary, that you resign from that office too. The two are separate appointments.
• State when it takes effect, if you want a date other than the day it is delivered.
• Ask the company to file the notice of change of directors and to send you a copy once it is filed.

Deliver it in a way you can prove, for example by email to the other directors and by courier to the company's records office, or to the company's lawyer. Keep the letter and the proof of delivery: they show when you stopped being a director.

When your resignation takes effect

Section 128(2) says a resignation takes effect at the later of two times: when the written resignation is provided to the company or to a lawyer for the company, and any date, date and time, or event the resignation itself specifies. A letter delivered on 3 March that says it takes effect on 31 March takes effect on 31 March. A letter that names 31 March but is not delivered until 10 April takes effect on 10 April.

Nothing in section 128 requires the company to accept it. Once it is delivered and any stated time has arrived, you are no longer a director, whether or not the registry has caught up.

If you are the only director, resigning can leave the company with no directors. Shareholders can put new directors in place under section 135, but until they do, no one can act for the board. Where you can, arrange a replacement first; see our article on what happens when a sole director dies or loses capacity for the problems an empty board creates.

Why the registry filing matters to you

Section 127 puts the duty to file on the company, not on you. Within 15 days after a change in its directors, the company must file a notice of change of directors with the Registrar, and the filing updates the company's notice of articles, the public record of who its directors are. Its own register of directors must also show the date you ceased to be one (s 126). Our article on changing directors and officers of a BC company walks through the company's side of that process.

Until the filing is made, a company search still shows you as a director. Lenders, suppliers and anyone researching the company will see your name, and demands can keep arriving about a business you have left. In a dispute, you may have no access to the company's registry account to fix it yourself.

If the company will not file the notice

Start with a written request to the remaining directors, with your resignation attached, asking them to file within the 15-day period. If that does not work, the Act gives you two routes.

• Application to the Registrar (s 127.1). A person who says they are not a director but is still recorded as one in the notice of articles can apply to the Registrar, on notice to the company, to have their name and address removed. The Registrar must make the change if you provide satisfactory proof that you are not a director and it appears the company has failed to file the notice of change. Your resignation and proof of delivery are the core evidence.
• Application to court (s 129). Where the facts are disputed, for example over the date you left, a person recorded as a director can apply to court for an order that they were not a director from a specified date, that the company's records be corrected, and that the company pay some or all of the costs of the application.

Liability after you resign

Resigning stops new exposure building up; it does not erase exposure from your time in office. The statutes that make directors personally responsible for certain company debts look at who was a director when the debt arose, and several close the door two years after you leave:

• Unpaid wages. A person who was a director or officer when wages were earned or should have been paid is personally liable for up to two months' unpaid wages for each employee (Employment Standards Act s 96). That section also says a former director is not liable for vacation pay that becomes payable after they leave office.
• Source deductions. Directors in office when the company had to withhold or remit share liability for unremitted payroll deductions, but no action or proceedings can be commenced more than two years after the director last ceased to be one (Income Tax Act s 227.1(4)).
• GST/HST. Directors are liable for net tax the company failed to remit while they were directors, and the CRA cannot assess a director more than two years after they last ceased to be one (Excise Tax Act s 323(5)).
• PST. A board member is liable for PST the company failed to levy, collect or remit during their term, and cannot be assessed once they are no longer a board member and more than two years have passed since they last were one (Provincial Sales Tax Act s 210(2)).

Because those clocks run from the date you actually ceased to be a director, a dated, delivered resignation, and a public record that matches it, avoid an argument about when the two years began. Our article on director personal liability in BC explains these regimes, the conditions the CRA must meet first, and the due diligence defence.

Resigning during a dispute or a separation

Directors often resign because something has gone wrong: a falling-out between co-owners, or a separation where one spouse sat on the board of the other's company. Keep in mind:

• Your shares stay yours. Resigning as a director does not change your shareholding or your rights as a shareholder. If you want out of the company altogether, see our article on what to do when a shareholder wants out.
• Other obligations continue. A personal guarantee of the company's loan or lease, an employment contract, or a shareholders' agreement is not ended by leaving the board. Each has its own terms.
• Separating spouses. Leaving the board does not settle how the company's shares are dealt with in property division. Our article on business shares on separation or divorce explains how that works.
• Think about information first. Once you leave, you may no longer see the company's accounts. Before you resign, find out where payroll and tax remittances stand for your time in office.

Leaving a company's board? Make your exit clear on paper

Our business lawyers can prepare your resignation, follow up with the company on the notice of change of directors, apply to have your name removed from the register if the company does not act, and review your exposure for the period you were a director.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.