Project Overview
The LCO reviewed Ontario’s Business Corporations Act (OBCA) to assess whether the current rule of joint and several liability for professional advisors—such as accountants, actuaries, and lawyers—continues to be appropriate. Under this rule, a professional who contributes even partly to a misrepresentation in corporate filings can be held responsible for the full amount of damages if other defendants cannot pay. This raises concerns about fairness, financial risk, and the potential impact on professional services.
The project examined whether Ontario should move toward proportionate liability—where each party is responsible only for the damage that matches their degree of fault—or whether other models used in Canada and internationally might better balance investor protection with fairness to professionals. Examples include capped liability systems and hybrid approaches used in jurisdictions such as the United States, the United Kingdom, and Australia.
To inform this review, the LCO conducted independent research, analyzed existing liability mechanisms, and consulted with a wide range of stakeholders. These included corporate lawyers, accountants, litigators, investors, and policy experts. The LCO also considered how the OBCA interacts with related legislation, including the Ontario Securities Act, and whether broader policy concerns around professional liability should influence reform.
After reviewing consultation responses and the available evidence, the LCO concluded that significant change to the OBCA’s liability regime was not warranted.
Key Recommendations
The LCO made one recommendation aimed at ensuring the OBCA continues to promote accountability while recognizing existing tools that already help manage professional liability risks:
Maintain Ontario’s current joint and several liability framework
- Keep joint and several liability for professionals involved in filings under the OBCA, as the evidence does not support replacing it with proportionate or capped liability systems.
- Recognize that existing mechanisms—such as professional insurance, contractual limits, and other financial tools—already help manage liability and address many of the concerns raised by stakeholders.
- Acknowledge that possible future mechanisms (e.g., financial statement insurance or specialized securitization tools) could further mitigate risk without altering the core legal principle.
These findings reflect the LCO’s conclusion that retaining joint and several liability best supports investor confidence, corporate transparency, and the public interest, while still allowing professionals and corporations to manage risk through other means.