Outgoing directors can be liable, incoming ones generally are not for arrears that predate them, and how long the exposure lasts depends on which corporate statute the company was formed under.
Short answer
CBCA s.119(1) makes directors “jointly and severally, or solidarily, liable…for all debts not exceeding six months wages…for services performed for the corporation while they are such directors.” The liability attaches to a period, not to the office itself — a director appointed after the wages were earned is not liable for them, however unpaid those wages remain on the appointment date. But it is not free of consequence for outgoing directors either: s.119(3) keeps them exposed to suit for two years after they cease to be a director, and a company incorporated provincially may have no equivalent cutoff at all.
Reading “six months wages” as a look-back period is the commonest way this provision is misapplied. It is a cap on quantum for each employee, and the liability itself runs to whichever period of directorship the services were performed in. Nothing is payable unless one of three conditions precedent in s.119(2) is also met — suit against the corporation with execution unsatisfied, or a proved claim in a winding-up, liquidation or bankruptcy — so a solvent corporation that simply pays its arrears produces no director liability at all, whoever sits on the board when it does.
CBCA s.119(3) is a complete, self-contained limitation: a director is not liable “unless sued for a debt…while a director or within two years after ceasing to be a director.” Ontario’s Business Corporations Act s.131 tracks the federal wage cap and conditions precedent closely but sets no limitation period of its own. Where a specific Ontario statute is silent, the general Limitations Act, 2002 s.4 fills the gap with a two-year period running from discovery of the claim, not from a fixed corporate-law event, backstopped only by the fifteen-year ultimate limit in s.15(2) — which can leave an OBCA company’s former directors exposed well past the point a CBCA company’s directors would already have been safe.
CBCA s.146(5) can extend liability beyond anyone actually appointed to the board. Where a unanimous shareholder agreement restricts the directors’ powers — giving a rolled-over founder, for example, approval rights over hiring or capital spending — the shareholders who hold those rights take on a director’s liabilities to the extent the agreement restricts the directors’ powers, whether or not they ever sat on the board.
The OBCA/CBCA limitation contrast decided a share purchase where the outgoing directors’ wage clock never stopped running. The period-not-office point is worked through in wage arrears the new directors did not inherit. For the veto-right extension, see a veto right that came with directors’ liabilities.
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