When is a Director’s Resignation Effective?

We know how it can happen. At a board meeting, there is some controversial business, something is said, a decision is made that is accepted by a majority (but not all) of the board, feelings are hurt, tempers flair and someone announces that he or she is resigning. But over a period of time – an hour, a day, a week – the person who has resigned wants to withdraw the resignation. When is a resignation effective? Can a resignation be taken back or withdrawn?

In the world of Ontario for-profit corporations, section 121.(2) of the Business Corporations Act states that a resignation of a director becomes effective at the later of the time the resignation is received by the corporation and the time specified in the resignation. But there is no such provision in the Condominium Act, 1998.

This issue (when is a resignation is effective?) was recently considered by the Ontario Divisional Court in the June 28, 2012 case of Adams v. Association of Professional Engineers of Ontario.

In the Adams case, Dr. Hogan resigned as a director of the Association of Professional Engineers of Ontario (“APEO”) by an email to the APEO Council dated March 3, 2012. By further email dated March 14, 2012, Dr. Hogan purported to withdraw his resignation. On April 13, 2012, the APEO Council met and accepted Dr. Hogan’s resignation. The question was whether or not Dr. Hogan had the right to revoke his resignation (before it had been accepted by the Council). There were no relevant provisions in the APEO bylaws, nor in the Ontario Corporations Act (which governs not-for-profit corporations).

The Divisional Court held that, in the case of a not-for-profit corporation, unless there is applicable wording in the corporation’s by-laws or governing statute, once a resignation is given it cannot be withdrawn or retracted without the Board’s consent. So, Dr. Hogan’s resignation was effective on its terms, and could be withdrawn only with the consent of the APEO Council.

It seems to me that this same reasoning might very well apply to a resignation of a condominium director.

So, be careful to think before you press the “send” button or otherwise deliver your resignation. Once delivered, you may not be able to take it back, unless the Board agrees.