What Makes a Minute Book Essential for Your Business?
Keeping a minute book up to date is hardly likely to be at the top of a business owner’s to-do list. However, a business’s minute book is the actual document of its operations. Fundamentally, the minute book records all significant business transactions that affect the company as a whole.
Under the Ontario Business Corporations Act (OBCA) and the Canada Business Corporations Act (CBCA), all corporations in Ontario and Canada are obliged to produce and keep an up-to-date minute book. According to the OBCA, a business must maintain the documents at a registered office or a lawyer’s office in Ontario that the company’s shareholders have chosen.
Why Is a Minute Book Required from Corporations?
A minute book records and includes all articles, by-laws, and alterations to such documents. It serves as a copy of any majority shareholder agreement known to the directors, as well as minutes of board meetings and resolutions. It can also include a director’s register, a securities register, a transfer register, and copies of all notifications.
Usually, companies are obliged to maintain records and minutes of meetings and resolutions of the board of directors and any committees. Whether you are registered provincially or federally, and regardless of the company size, the law requires that you conduct an annual meeting of shareholders. However, single shareholders who do not wish to meet each other may sign annual resolutions instead.
Many additional transactions must be recorded in the minute book by the company as per requirement by the law. These include the changes in the corporation’s registered office location appointment and the resignation of directors and officers, the addresses of directors, officers, and shareholders, as well as share issuances and transfers. It is also necessary to submit notifications with the government when the directors or executives of the company, their residences, or the corporation’s registered office change.
Reasons to Keep Corporate Records and Minutes Current
When there is a constitutional obligation, there are penalties for failing to comply with any of it. They may take the form of government-imposed fines, negative tax repercussions, private legal actions, or the suspension of the corporation’s operations. Failure to conduct shareholder meetings or keep correct minute books may result in a variety of penalties that may include:
- The company may fall behind on required government notification filings, resulting in the revocation of the company’s permit and licenses for noncompliance.
- Directors may face monetary fines for noncompliance, failure to maintain appropriate company documents, and failure to comply with federal filing obligations.
- The company may be subject to a hefty fine or penalty.
- The company may experience delays in one or more of the following:
- Responding to tax queries and requests from the Canada Revenue Agency
- Addressing shareholder questions or concerns about company activities and decisions made by directors
- Finalizing key transactions.
Furthermore, trying to collect and assemble previous business papers will consume additional time and legal costs. Businesses may struggle to find past legal share issuances and transfers, approval of essential contracts, changes in directors or officers, and other activities.
Inconveniences such as the above are avoidable if your business or corporation had correctly recorded or updated the minute book. For instance, if companies do not record resignations, former directors will be held responsible for certain acts done by subsequent directors. Difficulties in collecting the corporation’s previous history may yield issues for future directors, resulting in an inability to correct past corporate actions.
If you are a business owner and have ever pondered about that dusty old book in the corner of your office, or if you do not feel your company’s minute book should be kept appropriately, think again. Government authorities, lawyers, your auditor, or any business shareholders may seek your business’s minute book for several reasons. If you don’t already have one, the expense of instantly setting up one will cost more and will add to your stress levels. Therefore, prepare early and keep a minute book handy.
Blueprint Accounting, Inc. offers various services that can help you keep your business updated and maintain a minute book. As one of the best bookkeeping companies in Canada, we provide cloud-based services that give access to a reliable team of professionals with no hidden fees! Drop us a message to request a price quote!