“Sursa dumneavoastra de wills & estates, real estate and business law”. - Minute Books: the what and the why?
In this blog post, we will explore the significance of a minute book, its components, the importance of maintaining one, and the implications of not having a corporate minute book.
A minute book collects all critical corporate records so that the corporation’s shareholders and creditors can easily access. A minute book can be kept online, or in physical copy. Most importantly, all corporations in Canada and Ontario are legally required under the Ontario Business Corporation Act to maintain a minute book to account for accurate records. Furthermore, a corporate minute book is important to keep because the CRA, shareholders or creditors can request to see the minute book at any time.
Multiple documents must be included in the minute book:
1. Articles of Incorporation: legal documents that are submitted on the incorporation date to either the provincial or federal government
2. General By-Law: this section will detail how the business will operate and will also showcase some of the procedures that must be followed
3. Borrowing By-Law: this category will stipulate who has the authority to borrow on behalf of the Corporation. Generally, it will be the director or officer of the Corporation.
4. First Board of Directors Resolutions: this category will stipulate all of the critical decisions that were made, such as who voted and what was their role in the company at that time.
5. First Shareholders Resolutions: a formal record that shareholders use to communicate their concerns on executive compensation, social responsibilities and labour relations.
6. Forms Filed: any document that is filled with government entities must be recorded
7. Notices and Resignation: any statements that are sent to directors and shareholders, as well as employee notices
8. Consent to Act of the Board of Directors: initial documents that state that the director has consented to have their public name released to the Corporation
9. Directors Register: this document holds the list of all the Board of Directors members, when they were appointed, their address, and who was elected when.
10. List of Shareholders: the documentation will include a list of all the shareholders and when they became a shareholder
11. Shareholder Ledger: the ledger will account for how many shares each sharer is entitled to and the amount of their shares
12. Share Certificates: each shareholder will receive a share certificate proving that they own what they claim.
13. Transfer Registers: should a transfer occur, all information must be disclosed.
14. Shareholder Agreement: a document that states a shareholder’s rights in the Corporation.
The best way that a minute book can be kept is through annual revision and updates. The lawyer who helps prepare the minute book will consult with the company accountant to ensure that all sections comply with the law.
While many businesses may view the minute book as a burden, the benefit of having a minute book is worth escaping the consequences. The following consequences can incur if a minute book is not kept: Canada Revenue audits, fines, heavy lawyer fees if the minute book is not initially created and the lawyer must rectify all important legal documents and section it accordingly and a lack of transparency to investors, shareholders, and buyers (should you ever choose to sell your business).
RMS Estates offers several ways to assist your corporation, including drafting necessary documents, submitting required registry reports, acting as an intermediary with your accountant to ensure legal compliance, and maintaining meticulous organization of all essential documentation.
PLEASE NOTE THAT THE CONTENT OF THIS BLOG IS MERELY FOR INFORMATION PURPOSES AND DOES NOT CONSTITUTE LEGAL ADVICE.
Raluca M. Soica, BBA, CPA, CMA, JDBarrister & Solicitor Wills & Estates and Real Estate Lawyer 647.280.6497 raluca@rms-law.ca
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Raluca M. Soica, BBA, CPA, CMA, JDBarrister & Solicitor Wills & Estates and Real Estate Lawyer 11/9/2023 |
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