In Ontario, corporate minute book records must include the following:
Typically a minute book is prepared by legal counsel at the time of incorporation to include the above information. Thereafter, it is important for the corporate minute book to be kept updated to reflect any changes and to include any shareholder and director minutes and/or resolutions. Even where there have been no changes, annual minutes or resolutions of the shareholders and directors will be required to confirm re-election of directors, re-appointment of officers and auditors, waiver of audit, if applicable, and approval of financial statements.
Diligence in keeping the records up-to-date is important for a number of reasons:
The Business Corporations Act (Ontario) specifically mandates that these records be kept and includes provisions addressing recourse and penalty for non-compliance.
In the event of a government audit (CRA, EHT, WSIB) the agency often requests a copy of the minute book to confirm current and past information relating to directors, officers, shareholders and other matters that would be expected to have been documented in the minutes or resolutions of directors or shareholders.
Where a sale of the corporation is proposed, buyer’s counsel will want to conduct a review of the minute book as part of the due diligence to ensure the corporate records have been properly maintained and are complete.
In major transactions, including financings, the corporation’s legal counsel may be required to provide a formal corporate legal opinion which would require that the corporate records be reviewed for currency and completeness.
If a dispute arises among directors or shareholders it may be difficult to secure subsequent co-operation or agreement regarding prior events or matters needed to properly update the records.
Persons whose signature or approval may be required to complete or update the records may die or become unavailable to provide the missing signatures or approvals.
Changes in legal or accounting firms may result in some difficulty or delay in obtaining details regarding prior matters which might be needed to properly update the records.
For these reasons, we recommend that clients have our offices manage or assist them with updates and proper maintenance of the records and that accounting advisors be instructed to report to our offices on a timely basis on the information needed to permit the necessary updates to be documented.
If you would like to discuss this, please contact us.