What are my responsibilities to my former partner after leaving the company?
By Gord Ahier | March 17, 2014
Summery of the question:
Two people started a provincial corporation with one of them owning 100 per cent of the shares. Jeff, the partner, had no official interest in the company. The company made no money and had no HST/tax number.
The two parted ways, and the shareholder has been using the company for his taxes; now he claims he cannot complete his personal taxes until the company is resolved.
Does the former partner, Jeff, have any responsibility or liability to help resolve the company (such as pay to have the company deactivated), despite owning no shares? What are his responsibilities?
Gord Ahier answered:
Any obligations with respect to the company are obligations of the directors of the company. This often arises where a company does not make the necessary remittances of source deductions to the Canada Revenue Agency, in this situation a claim can be made against the directors personally.
In your situation, the question to ask is: whether the partner who owned no shares was a director of the company.
That being said, it is unlikely that shareholding partner needs to dissolve the company to be able to file his personal income taxes unless he was attempting to claim a loss for advances that he had made to the company.
However, as a director both would be responsible to ensure appropriate tax filings have occurred which would continue until the company is dissolved. As a result is important that you are aware of the obligations of a director before consenting to be one.
(Someone remains a director until he takes the necessary steps to resign. This would be documented in the minute book and the corporate filings with the appropriate authorities. The question would turn on whether the partner had resigned from being a director.)
Note: This answer has been edited for formating.