Updated: Oct 9, 2019
Many start-ups wonder why it is necessary to have a minute book in the first place. They think, "I already know who the directors and shareholders are, and the government has already provided me with the certificate of incorporation, so why is it necessary to have a minute book?"
First of all, let's cover what is a minute book and what is inside a one.
A minute book is an official record of your corporation's activities and history. It contains the following:
Articles of Incorporation and By-Laws (including all amendments);
Directors' and Shareholders' resolutions;
Share certificates, registers and descriptions (including records of issuances and transfers of shares);
Any unanimous shareholder agreement;
Registrar of directors, shareholders and officers (recording the appointment and resignation of directors and officers);
Records of changes in the registered office address of the corporation and the addresses of directors, officers, and shareholders
Copies of all notices; and
Minutes of meetings and resolutions.
All corporations in Ontario (incorporated under the Ontario Business Corporations Act (OBCA)) and in Canada in general (incorporated under the Canada Business Corporations Act (CBCA)) are required to maintain up-to-date minute books.
The OBCA states that the above records must be kept at a registered office or at other locations (such as a lawyer's office) in Ontario as designated by the directors of the corporation.
Not only is it the law to have an up-to-date minute book, but there are also other practical reasons to have a corporate minute book that is up to date.
1. For Auditing Purposes
If federal or provincial taxation authorities suddenly choose to audit you, you can show them your up-to-date minute book, which will streamline the process.
2. To Sell Your Business
You can't sell your business without a professionally-compiled up-to-date corporate minute book.
Having a lawyer review and put together your minute book will help the buyer to complete due diligence and evaluate your corporation. Without a proper minute book, your corporation may not seem like a good deal to prospective buyer!
3. To Secure Funding
Having a lawyer craft and update a professionally-compiled corporate minute book will help you to secure funding from third parties such as bankers, accountants and investors who need access to your minute book to evaluate how your company is doing.
4. To Avoid Penalties
If you do not have an up-to-date minute book, you could face penalties from the government such as fines of up to $25,000, law suits and adverse tax consequences. You could end up missing mandatory government notice filings, which can result in the cancellation of your corporation's charter for non-compliance.
If you are the owner or director of a corporation that does not have a professionally-compiled up-to-date corporate minute book and are interested in having us create and/or update your minute book, feel free to contact us at firstname.lastname@example.org.
Disclaimer: This blog post is for general information purposes only and is NOT intended to be relied upon for legal advice, or to be construed as legal advice. Please consult with us directly through email (email@example.com) for legal advice about your specific situation.