- THE MINUTE BOOK
THE MINUTE BOOK
WHY DO YOU NEED A MINUTE BOOK?
The Business Corporations Act requires that certain documents be prepared and maintained by all companies upon issuance of the Certificate of Incorporation. These documents are typically kept in a minute book -usually a binder, book, or case-whose sole purpose is to hold all of the corporations essential files. It is also permissible to maintain an electronic version of these documents.
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.. 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, 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 to insert this information
- Completed Registers with your Director, Officer, Shareholder information
- Completed Share information
Seeking the advice of a lawyer or accountant in completing this information is always advisable!!