In an owner-managed corporation, the corporation often does business with the person who runs it: it rents the owner’s building, buys the owner’s truck or hires another company the owner controls. Each of those is a contract in which a director has an interest.
Corporate statutes don’t forbid these contracts. They require the director to disclose the interest, keep the interested director out of the vote, and expect the contract to be fair to the corporation. Done properly, the contract stands; done badly, a court can set it aside or make the director hand over the profit. Loans and pay have their own pages: see the shareholder loan and salary and bonus resolutions.
- Approved by
- The directors without an interest; the shareholders if every director has one
- Signed by
- The directors entitled to vote, or the shareholders
- Disclosure
- The nature and extent of the interest, in writing or in the minutes
- Filed with the government
- No
- The test
- The contract must be reasonable and fair to the corporation
When you need one
- The corporation rents premises owned by a director or the owner.
- The corporation buys equipment, a vehicle or property from a director, or sells to one.
- The corporation hires a company that a director owns or manages.
- Two related corporations, such as a holding company and its operating company, contract with each other and share directors.
Who approves it
Each statute requires the director to disclose the interest and generally bars them from voting, with exceptions such as their own pay and contracts with an affiliate. The rows also show what happens when every director has an interest, which is the usual case in a one-director corporation.
| Jurisdiction | Rule |
|---|---|
| Canada, federal (CBCA) | Disclose in writing or in the minutes (s. 120(1)); the interested director doesn’t vote, except on their own pay, indemnity or a contract with an affiliate (s. 120(5)). The contract stands if disclosed, approved by the directors and fair (s. 120(7)), or if confirmed by special resolution of the shareholders after disclosure to them and fair (s. 120(7.1)). Otherwise a court can set it aside or make the director account for the profit (s. 120(8)). |
| Ontario (OBCA) | Disclose in writing or in the minutes (s. 132(1)); the interested director doesn’t attend the discussion or vote (s. 132(5)). If every director has to disclose, only the shareholders can approve the contract (s. 132(5.2)). A special resolution after disclosure to the shareholders also confirms it (s. 132(8)). |
| British Columbia (BCBCA) | A director or senior officer who is the company’s sole shareholder has no disclosable interest (s. 147(2)(e)). Otherwise the interested director doesn’t vote (s. 149(2)). If all the directors are interested they may all vote (s. 149(3)), but only a special resolution after disclosure to the shareholders protects the director from accounting for the profit (s. 148(2)(c)). |
| Alberta (ABCA) | Disclose in writing or in the minutes (s. 120(1)); the interested director doesn’t vote, except on a guarantee or other obligation for the corporation’s benefit, their own pay, indemnity or a contract with an affiliate (s. 120(6)). The contract stands if disclosed, approved by the directors or the shareholders and fair (s. 120(8)), or if confirmed by special resolution (s. 120(8.1)). |
| Quebec (QBCA) | Disclose the nature and value of the interest (s. 122), in the minutes or in writing (s. 124). The interested director doesn’t vote or attend the deliberations (s. 127). If every director must abstain, the voting shareholders approve the contract by ordinary resolution after clear disclosure (s. 129). |
| Delaware (DGCL) | Since the 2025 amendments, a contract with a director or officer is protected if a majority of the disinterested directors approve it after disclosure, if a majority of the votes cast by disinterested stockholders approve it, or if it is fair to the corporation and its stockholders (§ 144(a)). A contract with a controlling stockholder, including the owner of a majority of the shares, follows separate rules (§ 144(b)); where the only stockholder is also the only director, fairness is in practice the only route. |
| Model Act states (MBCA) | A conflicting interest transaction is protected if approved by at least two qualified directors, by a majority of the votes cast by qualified shares, or if it is fair to the corporation (ss. 8.61 to 8.63). With one director who owns all the shares, fairness is in practice the only route. |
Before you sign
- Disclose first. The interested director states the nature and extent of the interest, in writing or recorded in the minutes, before the decision is made.
- Show that the terms are fair. Record why they are reasonable: market rent, an appraisal, or quotes for comparable equipment or services. In a one-person Delaware or Model Act corporation, fairness is the protection that remains, so this record matters most.
- Work out who can approve. If at least one director has no interest, they approve it. If every director has one, use the shareholder route your statute provides.
- Approve each side. When two related corporations contract with each other, each one approves the contract.
- Put it in writing. A signed lease or agreement is far easier to defend than an informal arrangement.
In a one-person corporation
When you are the only director and the only shareholder, every contract with you or your other companies is a conflict, and there is no one else to approve it. Disclose the interest in the resolution, sign it as director and, where the statute sends approval to the shareholders, sign it as shareholder too (Ontario s. 132(5.2); Quebec s. 129; a special resolution under CBCA s. 120(7.1) or Alberta s. 120(8.1)). In British Columbia a sole shareholder who is the director has no disclosable interest (s. 147(2)(e)), but recording the terms and why they are fair still helps with your accountant and the tax authorities.
Sample wording
Adapt the wording to your corporation: replace everything in square brackets, and check your articles, bylaws and any shareholder agreement first. Each person signs and dates a copy, and a scanned or electronic signature is usually fine.
Resolutions of the directors of [Corporation name] (the “Corporation”)
BE IT RESOLVED THAT:
1. [Name], a director of the Corporation, has disclosed an interest in the [lease / agreement] with [other party] dated [date]: [nature and extent of the interest, for example, “[Name] owns the premises at [address]”].
2. The directors have reviewed the terms of the [lease / agreement], including [rent / price] of $[amount], and are satisfied that it is reasonable and fair to the Corporation, having considered [market rent comparisons / an appraisal / quotes].
3. The [lease / agreement] is approved, and [name, title] is authorized to sign it for the Corporation.
4. [Name] did not take part in the discussion or vote on this resolution.
The foregoing resolutions are passed by the signatures of all the directors of the Corporation entitled to vote on them, as of [date].
______________________________
[Name], director
______________________________
[Name], director
Resolutions of the shareholders of [Corporation name] (the “Corporation”)
BE IT RESOLVED AS A SPECIAL RESOLUTION THAT:
1. The shareholders have been told that [name], [the sole director / each of the directors] of the Corporation, has an interest in the [lease / agreement] with [other party] dated [date]: [nature and extent of the interest].
2. The shareholders have reviewed the terms of the [lease / agreement], including [rent / price] of $[amount], and consider it reasonable and fair to the Corporation.
3. The [lease / agreement] is approved and confirmed, and [name, title] is authorized to sign it for the Corporation.
The foregoing resolutions are passed by the signatures of all the shareholders of the Corporation entitled to vote on them, as of [date].
______________________________
[Name], shareholder
______________________________
[Name], shareholder
Use this when every director has an interest, as in a one-director corporation. A special resolution meets the highest threshold among the Canadian routes; Quebec requires only an ordinary resolution.
Action by unanimous written consent of the board of directors of [Corporation name] (the “Corporation”)
RESOLVED, that the Board acknowledges that [name], a director, has disclosed the material facts of an interest in the [lease / agreement] with [other party] dated [date]: [nature of the interest];
RESOLVED FURTHER, that the disinterested directors, having reviewed its terms, including [rent / price] of $[amount], and [market comparisons / an appraisal / quotes], find the [lease / agreement] fair to the Corporation and its stockholders and approve it;
RESOLVED FURTHER, that [name, title] is authorized to execute the [lease / agreement] on behalf of the Corporation; and
RESOLVED FURTHER, that the approval in these resolutions is given by the disinterested directors, and [name] signs this consent only because action by written consent requires the consent of every director.
This consent is signed by all the directors of the Corporation, is effective as of [date], and will be filed with the minutes of the proceedings of the board.
______________________________
[Name], director
______________________________
[Name], director
If the only director is also the only stockholder, keep the second resolution and the evidence behind it: the record of why the terms are fair is the protection that remains.
After you sign
- Sign the contract itself, for the corporation and for the director or their company.
- Keep the evidence of fairness with the resolution: rent comparisons, an appraisal or quotes.
- Review the terms when the contract renews; rent that was fair five years ago may not be today.
- Make sure the accounting records show the payments as approved.
What to keep in your minute book
- The signed resolution, including the disclosure.
- The contract or lease.
- The evidence that the terms were fair.
- Any general notice of interest a director has given.
Common questions
Can my corporation rent my building from me?
Yes. Corporate statutes allow contracts between a corporation and its directors, provided the interest is disclosed, the right people approve it and the terms are fair to the corporation. Your accountant will also want the rent to be at market rates.
Who approves the contract if I am the only director?
It depends on the statute. In Ontario and Quebec, the shareholders approve it when every director is interested; under the federal and Alberta statutes, a special resolution of the shareholders confirms it; in British Columbia, a sole shareholder who is the director has no disclosable interest. In Delaware and Model Act states, the contract is protected if it is fair, so record why it is.
What happens if the interest wasn’t disclosed?
In Canada, a court can set the contract aside or order the director to account to the corporation for any profit, on application by the corporation or a shareholder. It can often be fixed by disclosing now and having the shareholders confirm the contract, if its terms were fair.
Does this apply between my holding company and my operating company?
Yes, if you are a director of both. Each corporation approves its own side, and you disclose your interest in each. The federal, Ontario and Alberta statutes let a director vote on a contract with an affiliate, and so does Quebec’s when the director’s only interest is as a director or officer of the affiliate.
This page is general information about corporate resolutions in the United States and Canada, not legal or tax advice. The sample wording is a starting point: your articles, bylaws and any shareholder agreement may require something different, and rules change over time. For advice about your corporation, speak with a qualified lawyer or accountant.
Sources
- Canada Business Corporations Act, section 120
- Ontario Business Corporations Act, section 132
- British Columbia Business Corporations Act, sections 147 to 151
- Alberta Business Corporations Act, section 120
- Quebec Business Corporations Act, sections 122 to 131
- Civil Code of Québec, articles 324 to 326
- Delaware General Corporation Law, section 144
- Delaware Laws, volume 85, chapter 6 (2025 amendments to section 144)
- Model Business Corporation Act (American Bar Association), sections 8.60 to 8.63