Ethics and code of conduct

The director of a co-ownership is called to play a key role in the sound management of the co-ownership and preservation of co-owners' assets. To strengthen and maintain the relationship of trust with them, every director must be fair, honest and loyal toward the Syndicate and the co-owners. The director must also respect ethical standards and the Code of conduct stipulated by the Civil Code of Quebec and the declaration of co-ownership. In case of doubt, directors must act according to the spirit of those principles and rules. They  must also organize their personal affairs in such a way that they do not interfere with the performance of their duties.

The Co-Ownership’s interest : a priority

A director must always act in good faith and in the interest of the co-ownership. Its main preoccupation must remain the sound administration and financial management of the Syndicate. He cannot defend the interests of the developer that named him interim director or the interests of the co-owners that voted for him. Article 321 of the Civil Code of Quebec expressly stipulates that a director is recognized as a mandatary of the legal person that is a syndicate. This means that no one can impose partisan directives upon him.

Conflict of Interests and Disclosure

A situation that may lead to a conflict of interests is also to be avoided by any director. If a situation arises, for example that the services of a company would be retained by the syndicate, and the director has interests in it, it must be denounced formally as soon as possible. This denunciation includes the rights that the director has in the enterprise, specifying (if necessary) their nature and their value. The denunciation will be noted in the minutes of the Board of Directors. Moreover, a director should not vote or participate to the discussion (unless necessary) of the Board of Directors, along with the vote related to a question which places him in a situation of conflict of interests. Exceptions to this rule are wages and work conditions of the director.

Where the director does not denounce his or her interests in a contract to intervene with the syndicate, the court, at the request of the syndicate or a co-owner, may, without limitation, cancel the contract or order the director at fault to return to the syndicate the advantage obtained. The legal recourse must be taken within a year of the knowledge of the contract.

Duty of confidentiality

Every director is bound by discretion as to what he or she has knowledge of in the course of or in connection with the performance of his or her duties. He or she therefore must respect the confidentiality of all deliberations of the Board of Directors.

The divulgation or use of information (confidential or not) to the advantage of a director is also prohibited. The sanction that follows this prohibition is an action in damages and restitution of the profit attached thereto, as stipulated by the Civil Code of Quebec at Articles 323 & 2146.

Use of Property of the Syndicate

A director cannot use to his advantage or that of a third party the property of the syndicate. Also, he cannot appropriate the sums of the syndicate that he manages for his own personal use. In that regard, he must keep separate the assets of the syndicate from his own, for example by depositing the co-owners' monthly charges (condo fees) in the bank account belonging to the co-ownership, and not in his own.

Code of ethics and professional conduct

The board of directors may establish a code of ethics and professional conduct. A true guide  to ensure the integrity and professionalism of all directors, this code contains the rules that concretize the duties of care, diligence, honesty and loyalty set out in the Civil Code of Quebec. It specifies the rules of good conduct to be adopted between the directors and with the co-owners. It affirms the necessary solidarity between the members of the Board of Directors. Finally, it recalls the duty of directors to comply with it.

Disqualification of a Director

In addition to the sanctions previously mentioned, lack of loyalty towards the syndicate can be sanctioned. The Court may, on the application of an interested party, remove and prohibit from holding office as a director of the syndicate, anyone:

• Found guilty of an indictable offence involving fraud or dishonesty in a matter related to legal persons
• Who has repeatedly violated the laws relating to legal persons or failed to fulfil his obligations as a director.

WHAT YOU SHOULD KNOW!  A prudent director should react as soon as doubts are raised about his situation. To maintain his independence, he must refuse gifts, donations or advantages offered by anyone in regard to his duty as a director. All his energies must be focused on the best interests of the syndicate.
WHAT TO KEEP IN MIND:  A director can acquire (directly or indirectly) property that he manages, on the condition that he denounces it to the syndicate. He can also enter into some contracts with the syndicate.
WARNING! Every director must respect the confidentiality of the information received in the performance of his or her duties. He may not use, for his own benefit or for the benefit of a third party, the information obtained in the course of his duties, unless he is validly authorized to do so.

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