David Woolford is a lawyer in the KNOWlaw Group of the Toronto law firm McMillan Binch. This article was written with the assistance of Jennifer MacInnis and Kate Manning.

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When the clock strikes midnight on Dec. 31, 1999, the world will be holding its breath in anticipation of possible computer meltdown.

The problems stem from the fact that much of the software written before or early in this decade uses the last two digits to record a calendar year ­ it assumes the first two digits will always be 19 ­ so the year 2000 will be read as an invalid entry or as the year 1900. These "Millennium Bugs," as they have become known, mean that countless software programs which use dates won't produce the correct results. These bugs could affect everything from accounting, budgeting, and human resources programs to equipment containing computer chips.

Believing that Millennium Bugs are things that only systems departments and other technology professionals need to worry about is dangerous thinking. The Millennium Bugs are more than "just a computer issue." They have far-reaching consequences, not only for software developers, vendors and maintenance providers, but also for companies and their directors and officers who fail to ensure that their systems are millennium friendly or to adequately remedy so-called "Y2K" problems before it is too late.

When to worry

Though the next millennium d'esn't officially start until Jan. 1, 2001, Y2K problems will start surfacing Jan. 1, 2000, if not sooner. For a lot of older software that is still in use, the digits "99" have been used as an "error code" by programmers. This means that in addition to experiencing Millennium Bugs, such older systems will consider 1999 dates as invalid. This means that you will have to fix these systems by Dec. 31, 1998, at the very latest.

Whether the fix date for your computer system is Dec. 31, 1998 or 1999, it's critical to realize that this is a rock solid deadline. You should take steps quickly to identify and address any Y2K problems your organization may face in the near future, if not already.

Who's at risk

Directors and officers are legally responsible for managing the affairs of their companies. Those who do not address Y2K problems in their own companies, before the turn of the century, run the risk of personal liability to shareholders and customers for their indifference. Likewise, companies themselves could face liability from their customers and shareholders for losses that result from business interruptions or corrupt data.

Act now

Action now could save many headaches later. Prudent steps that should be taken sooner rather than later include:

- Address the challenges: Do an audit of internal computer systems to determine the extent of the Y2K problems and challenges your organization may face.

- Act as a customer: Examine the outside systems and companies which you rely on and question their management regarding the actions that they are taking to make their own systems Y2K compliant.