Why you Need a Minute Book
WHAT IS A MINUTE BOOK?
The Business Corporations Act specifcally requires that certain documents be prepared and kept by corporations. These documents are typically kept in a Minute Book, usually a binder, whose sole purpose is to hold all of your corporations essential files. These include your certificate of incorporation, by-laws, share certificates, and any other documents related to your business. The first documents to fall into this category are called organizational documents of the company. These are typically comprised of:
Articles of Incorporation, Certificate of Incorporation and all amendments
General Operating by laws
First Directors Resolutions
Minutes and Resolutions of the board of directors and executive committee
Minutes of shareholders meetings and resolutions
Copy of Unanimous Shareholder Agreement
Consent to act of directors
Registers: All statutes require that registers be prepared for a corporation. The registers include:
--Directors Register-Names and Addresses of each Director, when they were
appointed and when they resigned
--Officer Register- Names of Officers and the position they hold, when they were
appointed and when they resigned
--Shareholder Register – Names of all individuals or companies that hold shares
in the corporation, the number of shares owned, date shares were received and
when (if) shares were transferred back to the company or to other persons or
--Shareholders Ledgers—Individual Ledgers for each shareholder showing how
many shares they hold, any amount due on each share, the date received and
when transferred (if).
MAINTAINING YOUR MINUTE BOOK
All major events pertaining to your corporation should be reduced to writing and placed in the Minute Book immediately. In order to ensure that you always have “point in time” records of your corporate structure, you must make sure to update your Minute book when any changes occur, including:
--A new by-law if you vary the borrowing rights of the company
--New investors (shareholders) information
--Approval of contracts/agreements by the Directors
--Any resolutions of the Directors
--Share Transfer details
Regular Minute Book Maintenance includes:
--Annual Director/Shareholder Meeting Minutes must be prepared and inserted
--The insertion of all notices and adequate accounting records
--Changes to Directors, Officers and Shareholders information (new Form 1)
WHAT CAN HAPPEN IF YOU DON’T HAVE A MINUTE BOOK
If you don’t set up a Minute Book, or fail to keep your Minute Book up to date, it could result in:
-- significant costs and penalties if you are audited
--losing out on business,
--the inability to obtain required financing and banking delays
--not being able to close a real estate deal
--not being able to sell your business
--If you and a business partner decide to go your separate ways and there is no minute
book and approvals at meetings have not been properly documented, you may find your
partner leaving the company with more assets than is entitled to
-- In some cases you can even have your certificate of incorporation cancelled.
If you need to back track to create or up date your Minute Book, it will be costly, time consuming and, in some cases, impossible, which could end up being disastrous for you.
Even if putting the Minute Book together, after the fact, is possible, time is usually of the essence when a minute book is requested for review. By the time you’ve had the Minute book rectified, the opportunity for which it was required may be lost.
If you have not set up a Minute Book for your corporation you, in effect, you do not have proof of ownership.
WHY MIGHT YOUR MINUTE BOOK BE REQUESTED?
There are a variety of reasons, during the life of your corporation, that the Minute Book may be requested for Review. These include:
--A potential Investor for your company will want his/her solicitor to review the
Minute Book to ensure that the corporation is valid and subsisting
--If you are attempting to sell the company, you will be required to prove that all
transactions from incorporation to point of sale have been documented
--Where Real Estate Transactions are occurring, the Minute Book will be requested
to prove ownership
--Government offices may request the Minute Book to prove ownership percentage
KEEPING CORPORATE RECORDS ELECTRONICALLY
The Law and associated statutes requires that all corporate records be maintained and kept at your corporations records (head) office, You can also save these documents electronically, but there is no electronic equivalent to a “paper trail” which accurately depicts place and time for the succession of events.
When buying a Minute Book, or “Corporate Package”, the options now being offered on-line to Entrepreneurs is staggering. Here are some things to watch out for:
-All Minute Books should come at LEAST with the organizing tabs
-A Full Minute Book should have tabs, ledgers for you to fill out and some shares
If you are buying a package that includes Organizing your Corporation, make sure it includes:
--By-laws that either have your Corporate name on them, or with the functionality
for allowing you to insert this information
--Resolutions that contain your Directors or with the functionality for allowing you
you to insert this information
--Completed Registers with your Director, Officer, Shareholder information
--Completed Share information
If the package you receive only gives you some kind of template, or blank spaces for you to fill in, you’ll be left with trying to fill in those blanks yourself and you may end up with incomplete or inaccurate corporate records.
Seeking the advice of a lawyer or accountant in completing this information is always advisable.