CORPORATE RECORDS AND COMPLIANCE
Every Ontario and the federal corporation is required to maintain certain records at its registered headquarters, or another location authorized by the company’s directors. At Jahanshahi Law Firm, we can help ensure that your Ontario or federal corporation complies with legislated record-keeping requirements. A minute book includes all mandated documentation and information and must be made available for inspection by certain government agencies or private entities. The record-keeping of a corporation may include the following documents and information:
- Articles of incorporation;
- Articles of the amendment, if any;
- Articles of amalgamation, if any;
- Articles of revival, if any;
- Bylaws of the corporation and their amendments;
- Minutes and resolutions;
- Forms filed, including copies of annual returns;
- A list of important transactions of the corporation;
- A debt obligation’s register;
- A shareholder’s register;
- A shareholder’s ledger;
- A director’s register;
- An officer’s register;
- A share-transfer register;
- Shareholder agreement(s), if any;
- Share certificates;
- A list of real-estate property owned by the corporation; and
- Certain accounting records.
WHY YOU SHOULD MAINTAIN AN UP-TO-DATE MINUTE BOOK
Failure to maintain an up-to-date minute book has legal and business consequences some of which are listed below:
- There may be significant fines and penalties imposed by the Federal or Ontario government for not maintaining a proper minute book. For example, the Ontario Business Corporations Act sets out that failure to maintain accurate corporate records may lead to a fine not exceeding $25,000.00.
- Without a current minute book, the Canada Revenue Agency may dispute payment of dividends to shareholders and treat them instead as income.
- Without a proper minute book, there is no clear paper trail in regard to major transactions, contracts or decisions made.
- Without a minute book, it is not clear who the shareholders of the corporation are.
- Without a minute book, lenders and banks will be unlikely to provide you with an approval for mortgages or bank loans as lending institutions may want to review the minute book prior to the advance of the loan to establish proper ownership and decision-making authority within the corporation.
- A corporation may not be able to sell shares to third parties without a minute book as the solicitor for the individual or entity wishing to purchase the shares will likely want to review the minute book to establish decision-making authority and ownership of the outstanding shares of the corporation.
- Without an up-to-date minute book, it is likely that your corporation will not be able to purchase real estate as the seller’s lawyer or your own lawyer may wish to inspect the minute book.
- Certain suppliers and vendors may wish to inspect your corporation’s minute book prior to agreeing to conduct business with you.
- A properly maintained minute book can prevent internal conflict among shareholders and directors by keeping a clear record of share ownership, director authority, and major transactions and decisions. Without a properly maintained minute book, it may be more difficult to challenge a shareholder who claims higher share ownership or interest in the corporation.
- In the event a minute book is not initially maintained and kept up-to-date on a regular basis, there may be significant legal fees in setting up a minute book at a later stage and bringing it up-to-date as this task may be more time-consuming for the business lawyer in comparison to simply setting up a minute book right from the start.
I HAVE LOST OR DID NOT MAINTAIN A MINUTE BOOK FOR MY CORPORATION, WHAT IS THE PROCEDURE FOR BRINGING THE MINUTE BOOK UP TO DATE?
If your minute book is deficient or you have not set up a minute book at all, our business law team can help set up a minute book for your corporation and bring the minute book into good standing. We will ask you to provide us with various important documents related to the corporation including the articles of incorporation, articles of amendment, by-laws, minutes of meetings, and notices filed. Once we have all the documents in place, we will then begin preparing all necessary documentation including remedial resolutions and statutory declarations which set out the state of the affairs of the corporation at the date we prepare the minute book.
DOES YOUR FIRM PROVIDE AN UP-TO-DATE MINUTE BOOK WHEN YOU INCORPORATE A CORPORATION FOR CLIENTS?
If you hire us to incorporate a corporation for you, we will ensure that the corporation’s minute book is up to date as of the day we provide the minute book to you. We will then remind you on an annual basis that the minute book needs to be maintained or that the annual resolutions or filings are due. Call us today to discuss your corporation’s record-keeping requirements with an experienced business lawyer.