Some may refer to it as fall, others may call it as the season of meetings! As many organizations break for the summer, activities get back into full swing as the leaves start to fall from the trees.
This is also true when it comes to condominium boards. The next couple of months are often laden with annual general meetings and we often find ourselves dusting off our board meeting binders.
As many of us have agreed and volunteered to commit this year to a board or organization, it is important to remind ourselves of the responsibilities that go along with serving on a board of directors.
When it comes to condominium or not-for-profit boards, there are two distinct basic duties that board members are tasked with: fiduciary duty and the duty of care.
Fiduciary duty requires a director to act honestly, in good faith and in the best interest of the corporation. Included in this duty is disclosing any potential conflicts of interest to the board of directors and not voting or being present during discussions when a conflict does exist.
Fiduciary duty also includes the duty of confidentiality. This prevents the director from disclosing confidential information to others who could potentially benefit from the private information.
In Canada, it is important to remember that your duty as a director is to the corporation, which doesn’t always align with the condominium owners in the case of a condominium corporation. This is much different from the United States where the duty is owed to the shareholders.
It is important and interesting to note that most directors/officers insurance policies do not cover a director in cases where they have failed to meet the fiduciary duty owed to the corporation.
In fact, there have been some highly documented cases of directors on condominium boards in Ontario being sued for failing to meet their fiduciary duty to the corporation. http://www.cbc.ca/news/canada/toronto/condo-boards-toronto-1.4113053
While being reminded of these duties is not meant to be a deterrence to offering your valuable time to sit on a condominium board, the intent is inform and educate you so that you can perform your board duties with the utmost of confidence.
In our next article, we’ll continue the discussion on basic duties of board members and share more details on the duty of care. Stay tuned.