If your business is incorporated, you’ve probably heard of a “minute book”. But what is a minute book specifically, and why do you need one? If you have any questions about minute books, incorporation papers, or how KPA Lawyers can assist you, please contact us.
So what is it?
In essence, a corporate minute book is a compilation of all significant corporate documents, including the articles of incorporation, that shareholders and creditors of the corporation may access. A corporate minute book can be a physical binder with all the necessary documents inside, or your company may decide to keep one online for simple sharing.
The Ontario Business Corporations Act (OBCA) and the Canada Business Corporations Act (CBCA), respectively, mandate that all corporations in Ontario and Canada prepare and maintain an up-to-date minute book. According to the OBCA, a corporation’s directors must designate an alternate location (lawyer’s office) in Ontario for the keeping of the following records:
- Minutes of meetings and resolutions of shareholders;
- The bylaws, the articles, and any amendments thereto, as well as a copy of any unanimous shareholder agreement that the directors are aware of;
- A securities register;
- A register of directors;
- A register of transfers;
- and Copies of all notices.
A corporation must also prepare and maintain the following records in addition to the ones mentioned above:
1. Adequate record keeping requirements; and
2. Records containing minutes of meetings and resolutions of the directors and any committee thereof.
No matter the size of your company or whether you are registered at the provincial or federal level, you are required by law to hold an annual meeting of shareholders. The annual meeting can be replaced by annual resolutions if sole shareholders don’t want to meet with themselves. Numerous additional transactions must be documented in the corporation’s minute book per legal requirements. They consist of the hiring and firing of directors and officers, adjustments to the corporation’s registered office address, changes to the addresses of directors, officers, and shareholders, as well as the issuance and transfer of shares. When the directors or officers of the corporation change, as well as their addresses or the registered office of the corporation, notices must also be filed with the government.
Why should I have one? (besides being legally required)
The previous method of controlling a company’s legal side had drawbacks. Your minute book was typically a binder full of papers that were kept on a shelf. Rarely did business owners have knowledge of what all of these documents meant and how they affected their organization.
Keeping a digital minute book has many benefits, the biggest of which is probably the least well-known: greater transparency and comprehension of the underlying legal principles of your business. Over the course of the year, information simply wasn’t available when business owners actually needed to access and comprehend fundamental aspects of their operation.
Lawyers frequently encounter blank looks from clients when they ask for the corporation’s most recent minute books to prepare for the closing in corporate transactions like the assumption or provision of loans, the sale or purchase of property, or the sale of the business itself or its assets. Owners of businesses place a higher priority on running their companies than on keeping the books straight. Clients frequently have no idea that they have a minute book or how important it is to keep it updated. When trying to close the deal, having outdated records in the corporation minute books can cause delays and higher legal costs. Since buyers, lenders, and investors in these transactions rely on the corporation’s minute book, its accuracy is crucial.
What if my company owns real estate?
A paper or electronic real property register is kept at your registered office of any land or real estate that your corporation owns or has sold. Include the dates that the property was purchased, leased, sold, or otherwise disposed of. The following information must be included in any deeds, transfers, or other property titles or documents that demonstrate ownership interest in land:
- registry or land titles divisions and property identifier numbers
- legal property descriptions
- assessment roll numbers
- or municipal addresses.
The Ontario government will make a reference to real property registers if any property is forfeited during the dissolution of a corporation. The penalties for failing to keep accurate records are severe. Corporations can be fined up to $25,000 and individual officers and directors up to $2,000 each in addition to up to a year in jail.