What Are Minute Books?
A corporation’s minute books serve as the official record of the corporations’ activities. Both the Ontario Business Corporations Act (OBCA) and the Canada Business Corporations Act require corporations to maintain and update their minute books.
A corporation must keep certain records at its registered office, or some other location in Canada as set out by the directors. Subsection 140(1) of the OBCA requires the corporation to prepare and maintain the following records:
Additionally, a corporation must prepare and maintain (a) adequate accounting records; and (b) records containing minutes of meetings and resolutions of the directors and any committee thereof (s 140(2) OBCA).
Minute books often contain much more than the above information, operating to keep track of all the corporation’s actions and changes.
Updating the Minute Book
When transactions or changes occur within the corporation, the minute book should be updated to reflect this. At the very least, the minute book should be updated annually.
The corporation’s accountant will typically instruct lawyers on what needs to be updated. Failing to keep up-to-date minute books can result in the cancellation of the corporate charter, an audit by the Canada Revenue Agency, fines for directors and fines or penalties for the corporation itself.
What Are Minute Books Used For?
Minute books are required for a variety of reasons aside from complying with legal obligations. They are reviewed by accountants for audit purposes, they could be requested from the CRA or other government agencies for inspection, they may be requested by banks in order for the corporation to receive a loan, prospective purchasers of the company or shares will want to review them, and of course, they will be very important in litigation.
Why Do I Need to Update My Minute Books?
Most importantly, it is required by law and could be requested by the CRA for auditing purposes. Keeping minute books updated will ensure that a corporation does not have to scramble and pay lawyers to update months or years of missing documentation.
The cost and difficulty of updating minute books retroactively for missed months or years will surpass the cost of updating the minute book on an annual basis. Additionally, it could cause delays when seeking a loan for the corporation, or when the corporation is being sold.
Annual Information Returns
Corporations are also required to file a Corporations Information Act Annual Return to ensure the corporation’s information is up to date on the corporate public record.
For tax years ending after December 31, 2008, corporations are required to file the Corporations Information Act Annual Return together with their T2 Corporation Income Tax return within six (6) months after the end of the corporation’s tax year.
Typically, the corporation’s accountant prepares these documents, not the corporation’s lawyer.
Preparing and maintaining updated minute books protects the corporation and simplifies corporate operations. It is important for corporations to keep updated documentation to comply with the laws and to avoid future issues that require access to the minute books.
For more information on this or any other corporate law matter, please contact us to discuss.