A common misconception in closely held corporations is that a director who stops showing up, returns company property, and ceases all involvement has automatically resigned as a director.
Not necessarily.
Under the Ontario Business Corporations Act (OBCA), resignation and removal are separate concepts. A director generally remains in office unless they resign in accordance with s. 121 or are removed by shareholders under s. 122.
Even where there is strong evidence that an individual abandoned their employment or officer role, they may still remain a director of record.
Where a majority shareholder has sufficient voting control, the more practical solution is often to follow the statutory process. Shareholders holding at least 5% of the voting shares may requisition a meeting under s. 105, remove a director by ordinary resolution under s. 122, and fill the resulting vacancy under s. 123.
Every situation is fact-specific, and the appropriate strategy will depend on the corporation’s share structure, governing documents, and history.
If your corporation is dealing with a shareholder dispute, governance deadlock, or questions regarding director removal, contact us to discuss your options and develop a practical path forward.