If you have read some of our other articles, you may already know that we often compare a corporation to a robot to make the subject easier—and, if we are being honest—a bit more interesting to understand.
In this article, we are going to walk you through Annual Maintenance—what it is, when to do it, and what it involves… With some robot analogies along the way!
What is Annual Maintenance?
Annual Maintenance is a series of tasks that are required to be completed every year to ensure that your corporation is compliant and running smoothly. It also ensures that the governing body is aware of your status and updated on any changes you have made regarding the structure or governance of your company.
If we use our robot analogy, we could compare Annual Maintenance to a yearly tune-up: every year, your corporation needs a tune-up to ensure they are still in good working order, to record any significant changes, to complete all of the required filings, and to avoid problems in the future.
Generally speaking, there are two components to annual maintenance (explained in more detail below):
- Filing annual corporate information return(s)
- Completing internal meeting/resolution requirements.
When do I need to have my Annual Maintenance completed by?
The internal meeting/resolution portion of your corporation’s annual maintenance should be completed within six months after its fiscal year-end date.
The annual filing portion is often required within 60 days of your company’s incorporation anniversary. Still, it varies from one jurisdiction to another (for example, in Ontario, it varies based on your fiscal year)—so it is important to check with your local jurisdiction. One way we can help you is to keep track of these deadlines so that you do not have to stress about remembering them.
Okay, so what do I need to do?
An essential first step when your fiscal year ends is to have your accountant prepare and finalize your financial statements for that year.
The Annual Maintenance work that needs to be done depends on the types of events that have happened in the past year of the company’s life. That being said, every company needs to—at the very least—take the following steps as part of their Annual Maintenance process:
1. File a corporate annual return
Every corporation is required to file an annual return—this is due at different times, depending on what jurisdiction the company is incorporated under. If you are registered as an extra-provincial corporation, you may still need to file within that jurisdiction as well. If you are unsure of what your company requires, you can contact us to help you.
2. Consent to act as a director—for all directors
Every year, the directors of the company need to confirm that they still qualify to act as directors and still agree to act as directors for the upcoming fiscal year.
3. Annual shareholder resolutions
Every year the shareholders need to elect directors, acknowledge receipt of the financial statements, determine whether financial statements should be audited, and deal with other business.
4. Annual directors’ resolutions
Every year the directors need to appoint officers, review and approve of the financial statements, and deal with other business.
5. Update the corporate Minute Book as needed
Once all of the required documents have been signed, they should be stored in the company’s Minute Book. The Minute Book records should also be reviewed to make sure that they are still accurate, particularly registers of individuals with significant control and registers of interests in real estate.
Often, companies go through other changes as well, and they have yet to record that in their Minute Book. If the following events have taken place and have yet to be recorded, they will also want to be dealt with at the time of Annual Maintenance:
- Change of registered office address
- Change of director(s)
- Change of director(s) address, residency status, capacity
- Change of officer(s)
- Changes in the shareholding (such as issuing more shares, share transfers, gifts, etc.)
- Changes in the interest in land (such as new land bought, land transferred, sold, etc.)
- Dividends or Management bonuses are paid out
The above list does not include everything, and the best case scenario is to have these events recorded as they happen, but things often get missed—which is why a review of your Minute Book records during Annual Maintenance is such an important step to ensuring that your company records stay up-to-date.
How can I get help?
Many people need help understanding Annual Maintenance requirements or get overwhelmed by these tasks and often neglect to do them altogether. This will eventually cause problems (involuntary dissolution of the company, loss of a sale, court dispute, professional fees to clean up records, tax claims, etc.), and the cost of rectifying those problems is almost always greater than the cost of prevention.
We have worked hard to make these requirements less overwhelming for you, so you can focus on what you do best.
Follow the links on this page to get help with Annual Maintenance. We can help in other ways, too—with our platform; you will have a place to store your records and solutions to meet all your needs; it gives you one less thing to worry about.
