What is a Minute Book, and why does it matter?
A corporate Minute Book is a collection of a corporation’s most important records. It includes the articles of incorporation (which is like a corporation’s birth certificate), minutes of shareholders and directors meetings, a current list of shareholders, directors, and officers, and much more.
Minute books can be in the form of a physical binder containing all required documents in paper format, or they can now be in digital format saved in the cloud for easy access, updating, and sharing.
Keeping Minute Books up to date is often a low-priority task for businesses; however, all corporations are legally required to maintain a Minute Book and to keep it up-to-date. Even more important, up-to-date Minute Books avoid major headaches at critical moments for the business; usually, the question of Minute Books comes up when a company is trying to get financing, trying to close the sale of the business, dealing with an audit from tax authorities, or dealing with a dispute amongst the shareholders… in each of these cases, the process will be more protracted and painful (and could be seriously derailed) if the corporation’s Minute Book is not up-to-date. See below for more explanations about why Minute Books really do matter.
Where do Minute Books need to be kept?
A Minute Book must be kept at the corporation’s registered office of the corporation. With virtual or digital Minute Books, it is adequate if the Minute Book can be viewed or reproduced at the registered office of the corporation. So if the Minute Book is stored on a secure cloud platform, then it can meet the legal requirement of being accessible at the registered office address while also being easy to access and manage offsite.
What does a corporate Minute Book include?
Minute books include the following corporate documents:
- Certificate and Articles of incorporation
- Bylaws of the corporation
- Director, shareholders and committee resolutions/meeting minutes
- Documents of consent, resignation and/or termination of directors and officers
- Directors register
- Officers register
- Shareholders register
- Subscriptions for shares
- Share certificates
- Transfer registers
- Securities and shareholders ledgers
- Annual returns and notices filed with applicable corporate registries
- Details of the corporation’s quarterly and/or annual financial statements
- Material agreements entered into by the Corporation
- Debt obligations register
Depending on the jurisdiction of incorporation, a corporation may also be required to maintain some additional documentation/registers, such as:
- Register of individuals with significant control is required to be maintained by a federal corporation and British Columbia corporations (also referred to as transparency register);
- Register of interest in land is required to be maintained by Ontario corporations;
Why is it important to keep corporate Minute Books up to date?
To maintain a formal record of a corporation’s history
The reason for maintaining Minute Books is to keep and maintain in one place (either in the form of a hard copy of the digital Minute Book) all the documents and records of the corporation since incorporation and any changes that may have occurred in its lifetime. This allows various corporation stakeholders, like directors, shareholders, lawyers, accountants, creditors, etc., to look back at the corporation’s history, decisions and transactions, if any.
For easy sharing of the corporation’s records with stakeholders
Minute Books are needed for legal, financial, lending, banking, or other purposes and also provide a repository for various legal contracts, such as shareholders agreements, indemnity contracts, transfer agreements, etc. Such contracts may contain various provisions of short-term and/or long-term commitments with various parties, which may affect the business and viability of the Corporation.
Each corporation is treated as a separate legal person under the law. The Minute Book is like a memory bank for that legal person and acts as a central repository of critical information. It is especially important for corporations that have turnover in their management and ownership. Still, even for owner-operated corporations, the Minute Book is vital for keeping track of critical information and as a safeguard in the event that the owner/operator is somehow incapacitated.
For legal, accounting and tax purposes
The Minute Book is an important tool for legal, accounting, auditing and control requirements, used to record transactions like payment of dividends, issuance of management bonuses, issuance of stock options, and the like. These transactions are not just records that sit in the Minute Books of corporations, they are also used for accounting, taxation, and contractual/legal purposes. Such information and documents are sometimes also required in connection with audits and tax returns when dealing with the Canada Revenue Agency (CRA) and other government agencies.
For transactions like selling, amalgamation, continuance, etc.
It is always a good idea to keep your corporation and its Minute Book in a form where it could be sold to or merged with some other organization. A potential buyer will want to take a look at the Minute Book to help assess the viability and health of the corporation and to understand its history. An up-to-date Minute Book can make a big difference in the price you can command, the amount of time it takes to close a deal, and whether you even get to close a deal (some get derailed by unkept records).
For financing and raising capital
Many corporations seek financial support throughout their lifetime for reasons like expansion, to start a new product line or even to save the business from closing. We know the best time to secure financing is when you need it the least, but people usually seek financing when their timelines are tight. It is critical that your corporation’s Minute Book is up-to-date as lenders and investors will want to see your Minute Book to help determine if your corporation is well maintained or if it is safe to lend/invest their money in your corporation. This is true for both institutions (like chartered banks) and for private investors and lenders.
For resolving disputes with shareholders/directors
If there is a disagreement amongst the shareholders regarding a transaction or a decision, a Minute Book can help shed light on the issue. Being able to look back at the transaction or meeting minutes can help resolve some disputes or settle confusion on matters.
If your corporation’s records are missing or not maintained properly, Tobuso can help you take the right steps to form and update your corporate Minute Book. You can contact us to get a free consultation and get started!
At Tobuso, we are focused on keeping you organized so that you can focus on what you do best. If you are thinking of incorporating your business, call us for a hassle-free experience and concentrate on what matters most: your business.
