What Is a Corporate Minute Book and Why Do You Need One?
What Is a Corporate Minute Book?
A corporate minute book operates as the official record of your corporation's activities. Any and all corporate records and transactions that involve your corporation should be documented in this book.
What Should Be Included in a Corporate Minute Book?
The contents of a corporate minute book are varied but all serve to provide a clear picture of the corporation's structure, activities, and decisions. Below are some important corporate documents that must be included:
Articles of incorporation
Corporation by-laws
Registers of the corporation's directors
Officers register
Shareholders register
Resolutions of the directors and officers
Notices and registrations filed with the registry
Share certificates
Meeting minutes
Why Do You Need a Corporate Minute Book?
Understanding the importance of a well-maintained corporate minute book can save you from potential legal headaches and ensure your corporation runs smoothly.
It's the Law
Not only is a corporate minute book required by law in BC but also in all of Canada under the BC Business Corporations Act and the Canada Business Corporations Act. Not having a minute book can result in you being convicted of an offence under the Act and fined up to $5,000.
Requests for Investments and Bank loans
If you are looking to attract investors, your corporate book will outline the validity and structure of your business for them. Potential investors will also examine the record of all existing and previous shareholders along with the consideration that was given for their shares.
Similarly, your corporate book will be of interest to banks if you are trying to secure a loan. Examination of the shareholder's agreement and articles of incorporation will help them determine which individuals are allowed to borrow money.
Government Review
As mentioned, maintaining a corporate minute book is required by law. So, if a government agency makes a request to access it, this request must be accepted, and the minute book must be made available.
Transferring Ownership and/or Selling the Corporation
A corporate minute book is necessary for transferring shares because it will demonstrate to the transferee that you actually have ownership of those shares to begin with.
A corporate book also helps greatly when you are looking to sell your business. A potential buyer will want to examine the corporate records of transactions and an updated minute book will make this much easier.
It may not seem important to some, but it is not a good idea to put together a corporate book only when access is requested. This will be extremely time-consuming and expensive. Furthermore, you may not be able to gather all of the relevant documents which could result in certain sanctions being imposed.
How Do I Go About Incorporating My Business?
To begin the process of incorporating your business, it's important to determine who will act as the company's directors and decide on the necessary classes of shares.
At Parr Business Law, we are here to help with preparing and filing all the legal documents and ensuring that you don't miss any steps involved in the process. If you are interested in incorporating your business in BC, feel free to contact us to learn more.
What Benefits Does Incorporation Offer?
Incorporating your business can provide several benefits, such as easier access to capital and funding, the opportunity to utilize unique tax planning strategies to save money, and enhanced recognition for your business name.
Additionally, the shareholders of the business will have a more limited personal liability. Unlike incorporating at the federal level, there are no requirements for residency to incorporate your business in British Columbia.
Other Important Corporation Obligations
Maintaining your corporation involves more than just updating your corporate minute book. Here are some additional responsibilities to ensure your business stays compliant:
Financial Statements: Prepare and share financial statements according to CPA standards, providing them to shareholders at least 21 days before the annual meeting.
Annual Return: File an annual return with Corporations Canada to confirm compliance with the CBCA (separate from tax returns filed with the Canada Revenue Agency). This is due within 60 days of your incorporation anniversary.
Work with an Auditor: Annually, appoint an auditor to review your finances, ensuring transparency and shareholder confidence. If your corporation is non-distributing, shareholders can opt out of this requirement.
Address Updates: Keep your registered office address current, notifying Corporations Canada within 15 days of any changes.
Director Changes: Inform Corporations Canada within 15 days of any changes in directors or their addresses. Ensure at least 25% of directors are resident Canadians.
Amending Articles: Record any changes to your articles of incorporation in your minute book, such as business name, location, director numbers, share structures, or operational restrictions.
