May 02, 2014

OCA decision a cautionary tale for sole shareholders

Advocate Daily Post

Sole proprietors who operate a business through a corporate entity can no longer assume they are free from personal liability following the Ontario Court of Appeal’s recent decision to pierce the veil of a company with only one shareholder, says Toronto corporate finance and securities lawyer Daniel Rothberg.

In Shoppers Drug Mart Inc. v. 6470360 Canada Inc., the drugstore chain was appealing an earlier decision that rejected its request to hold the sole shareholder/director of a company it hired to pay utility bills liable for a misappropriation of funds.

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Photography by Ahmad Nawawi