How can a Proxy Director Reduce his or her Liability?

A proxy director is a person who is appointed to act as a director of a company by someone else, such as a shareholder or a parent company. While a proxy director is not officially appointed or recognized as a director by the company, they can still be held liable for their actions if they exercise significant control over the company and their actions result in harm to the company or its stakeholders.

To reduce their liability, a proxy director should take the following steps:

  1. Obtain professional advice: A proxy director should obtain professional legal and financial advice to ensure that their actions are in compliance with all relevant laws and regulations. This can help minimize the risk of liability for any actions taken on behalf of the company.
  2. Exercise due care and diligence: A proxy director should exercise due care and diligence in their role, acting in the best interests of the company and its stakeholders. This may involve seeking independent advice or conducting thorough research before making decisions.
  3. Ensure proper governance: A proxy director should ensure that the company has proper governance structures in place, including a board of directors and appropriate policies and procedures. This can help minimize the risk of liability for any actions taken on behalf of the company.
  4. Document decisions and actions: A proxy director should keep detailed records of all decisions and actions taken on behalf of the company, including any reasons for those decisions. This can help demonstrate that they acted in good faith and in compliance with their duties as a director.

Overall, a proxy director can reduce their liability by acting with due care and diligence, obtaining professional advice, ensuring proper governance, and documenting all decisions and actions taken on behalf of the company. It is important to seek professional advice if you are acting as a proxy director to ensure that you are fulfilling your responsibilities and complying with all relevant laws and regulations. If you have any questions, please contact us at info@falconlawyers.ca or 1-877-892-7778.

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