This blog post is not legal advice and is intended for general informational purposes only. Always speak with a lawyer before acting on any of the information contained herein.
If you’ve incorporated a business but you don’t have a minute book or you haven’t updated it since incorporating, you’re probably thinking, “is it really that important for my business?”.
Yes, it is. Creating, or maintaining, your minute book is an important task but is often overlooked. Beyond being a legal requirement, corporate records have practical considerations.
Let’s discuss why. In today’s post, we’ll cover:
What’s a minute book?
In the simplest terms, a minute book is a record of your corporate documents. From the beginning, your company must document its incorporation, organization, and keep track of changes.
This task becomes complicated as your company grows. Based on your company’s needs, we can help maintain your corporate records, or create your minute book.
What documents does a minute book contain?
Generally, you will find the following documents in a minute book:
1. Certificate of incorporation;
2. Articles of incorporation (and any other articles of the corporation);
3. By-laws of the company;
4. Shareholders’ agreement;
5. Minutes of shareholders’ and directors’ meetings/resolutions;
6. Directors’ and officers’ registers;
7. Securities register;
8. Share transfer register;
9. Share certificates;
10. A copy of all notices
Other documents are also found in minute books. These include contracts, transactions, directors’ consents, and share subscriptions.
Who has access to your minute book?
Generally, your company’s shareholders and creditors can request access to certain documents found in the corporate records. However, they can’t access the accounting records or the directors’ minutes of meetings and resolutions. Also, others may also request access, such as a potential buyer for your business or the government in case of an audit.
Why do you need a minute book?
Keeping corporate records is a requirement regardless of whether your organization is incorporated under the Canadian Business Corporations Act or the Quebec Business Corporations Act. Beyond this, maintaining corporate records allows you to provide up-to-date and accurate information to key stakeholders: such as directors, shareholders, potential investors, creditors, and in case you decide to sell your company, to the new potential owner.
Where is a minute book stored?
Store your minute book at your head office, or at a location decided by the board of directors. We can store your corporate records to ensure they are secure and updated in a timely fashion. Your minute can also be stored electronically and shared with your lawyer for instant updates as needed.
When does your minute book need updating?
In short, your minute book needs annual updating, and every time you make an important decision or transaction. These include changing your company name, issuing shares, or changes in the directors, officers, or shareholders.
Essentially, you need a clear timeline of transactions and changes in your company history. Without an up-to-date minute book, corporate events and transactions are not evidenced properly. In some cases, this means that a transaction or event technically never occurred.
What are the consequences of failing to maintain your minute book?
There are many practical considerations for keeping your corporate records up to date. First, it will cost you a lot more to have a lawyer update many years of your minute book. It’s far cheaper to have it updated yearly since there are fewer changes to record.
Additionally, there will be delays if you need to update your corporate records before being able to conclude transactions. Moreover, the government may request access to your minute book. For example, the CRA may decide to check a dividend declared to shareholders.
Maintaining your records indicates you have strong corporate management practices. It avoids delays in your business and makes it easier to respond to government challenges.
So, what can you do to get started? Ensure that the documents above are included in your minute book and note any changes that have been made. If you don’t have a minute book, the first step is to gather the documents listed above. Although it’s easier to maintain records than to update years of changes, the important part is to start somewhere. We can assist in updating or creating your company’s minute book.