What is a “Minute Book” and why should I care?
After completing the incorporation process, your lawyer should provide you with a corporate minute book which becomes the permanent repository of your corporation’s key documents (the “Minute Book”). The Minute Book must be kept at the corporation’s registered office or at another place in Canada as designated by the corporation’s board of directors (the “Board”).
There are at least three good reasons to maintain your Minute Book:
- It’s the Law: Both federally and provincially incorporated companies are required to maintain corporate records that meet the statutory requirements of the Canadian Business Corporations Act (section 20) and Ontario Business Corporations Act (section 140) respectively. Although rare, it is possible statutory penalties may be assessed for failure to attend to these matters.
- Equity Transactions: An investor or purchaser of your corporation will likely want legal opinions relating to various corporate governance matters. Having an up-to-date Minute Book will provide for a smoother (and likely less expensive) transaction process. Even if you wish to transfer the corporation to a family member, you will want to ensure that the transfer is appropriately documented in order to avoid costly remediation in the future.
- Third Party Review: Various other parties may also want or need to examine your Minute Book from time to time to verify corporate authority or structure including:
- Professional service providers (e.g. lawyers, accountants) prior to being retained
- Lenders prior to issuing a loan
- Real estate agents prior to completing commercial real estate transactions
- The Canada Revenue Agency (as part of a tax audit)
- Other federal/provincial taxation authorities.
As you can imagine, time is usually of the essence when a Minute Book is requested for review and remediating an out-of-date Minute Book can increase costs. Setting up a Minute Book from incorporation and regularly maintaining it will save money and aggravation.