Status of Entrepreneur in a Corporation

Every entrepreneur that incorporates their business and starts operations must realize and understand their actual position in the company. There are three major statuses (hats) that apply to almost every entrepreneur in a small/medium corporation in Canada:

a. Shareholder
b. Director
c. Officer

It is important to understand this distinction in order to see how each of the statuses implies different responsibilities and liabilities on an entrepreneur:

As a shareholder, a person enjoys the “limited liability” of a corporation and risks only the value of her/his investment into the company;

As a director, a person might end up almost fully liable for various actions of a corporation. Many laws impose personal liability on directors of a corporation for illegal or damaging activities of a corporation. In bigger companies, directors could be also liable towards minority shareholders;

As an officer, a person could be found liable for many actions of a corporation for which that person was responsible;


This topic might become extremely complicated as well as extremely important for a person to understand and to manage their actions accordingly. For further information, please feel free to contact us at [email protected]


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