Many small businesses, particularly those operated by family members and close associates, sometimes overlook the importance of properly managing their business documents, including the corporate minute book. Having an up-to-date minute book becomes crucial when you are contemplating selling your business or seeking investment from potential investors.
Reasons for Keeping a Well Maintained Minute Book
Here are some reasons in maintaining a corporate minute book:
For Selling the Business
A well-kept corporate minute book is essential when selling a business as it enables a seamless due diligence process, legal compliance, and provides transparency on ownership, mitigating risk and potentially increasing the business’s value. Legal professionals will often need to scrutinize your minute book during the due diligence process.
For Raising Funds from Investors
When raising funds from investors, an organized minute book instills investor confidence, safeguards legal interests, ensures compliance with funding conditions, and expedites negotiations, making the business more appealing to potential investors.
A well-maintained corporate minute book can serve as a valuable resource in preventing disputes, as it clearly documents important decisions and ownership percentages.
Financial and Regulatory Compliance
The corporation’s accountant and the Canada Revenue Agency (CRA) may require access to your corporate records for financial and regulatory compliance purposes.
What is a Minute Book?
A corporate minute book is a structured repository designed to house crucial corporate documents, including but not limited to the articles of incorporation, minutes from shareholder and director meetings, stock certificates, tax filings, by-laws, and other legally significant papers. Traditionally, these records are stored within a physical binder. However, it’s important to note that the Canada Business Corporations Act (CBCA) permits the maintenance of these records in electronic form.
What’s Included in a Minute Book?
So, what should you include in your corporate minute book? Here’s a breakdown of the essential contents that should be organized within your minute book:
This section encompasses the articles of incorporation, any subsequent amendments, and restated articles of incorporation. Articles of Incorporation are vital legal documents submitted to the provincial or federal government to establish a business within Canada. If you can’t locate them, you can obtain a copy from Corporations Canada for federal corporations.
Here, you should include your corporate by-laws and any amendments. By-laws serve as the rules governing a corporation’s internal operations. The federal government provides model by-laws for companies.
This document should detail the names of directors, their residential addresses, their Canadian residency status, dates they assumed and, if applicable, ceased their director roles.
This section should contain documents filed with government entities such as Corporations Canada or Ontario’s Government and Consumer Services.
Notices and Resignations
Include notices sent for all director and shareholder meetings and any updates regarding director addresses or resignations.
Detail the names of corporate officers, their residential addresses, dates of assuming office, and, if applicable, the dates they left their officer roles. Common officers include President, Vice-President, Treasurer, and Secretary.
Resolutions and Minutes
This category should incorporate Director Resolutions, Shareholder Resolutions, Minutes of Directors Meetings, Minutes of Shareholders Meetings, and consent to act as a Director.
A share certificate is split into a certificate part and a stub part. The certificate should remain with the holder, while the stub part stays in the corporate minute book, listing all pertinent information.
This ledger documents each shareholder’s holdings, including the date they received shares, certificate numbers, transfer details, and the balance of shares they hold.
This register should display the names, addresses, and shareholding details of all shareholders.
A Transfers Register outlines transfer numbers, dates, certificate numbers, share quantities transferred, and details of the parties involved.
Debt Obligations Ledger
Maintain a record of all debt obligations. If your corporation falls under the Ontario Business Corporations Act (OBCA), you should also keep a Register of interests in land in Ontario in the corporate minute book.
Include a comprehensive shareholder agreement specifying the rights and regulations of shareholders, if applicable.
It includes the assets that this corporation owns for example any properties or securities the corporation owns.
Individuals with Significant Control Register
For CBCA corporations in Canada, the minute book has to maintain a register of individuals with significant control, containing relevant information.
Ensuring that your corporate minute book contains these critical elements is imperative for maintaining transparency, legal compliance, and effective corporate governance within your organization. If you need help with your minute book, you should consult with your legal counsel.
This is what my electronic minute book looks like: