In Ontario, a business, particularly a corporation, is legally required to maintain a minute book as part of its corporate records. Here’s why you need one and how often it needs to be updated:
Why You Need a Minute Book
- Legal Requirement: Under the Ontario Business Corporations Act (OBCA) and the Canada Business Corporations Act (CBCA) for federally incorporated businesses, corporations are required to maintain a minute book. This book serves as the official record of the corporation’s activities and decisions.
- Corporate Governance: It includes essential documents like articles of incorporation, by-laws, minutes of meetings, resolutions, share registers, and records of directors and officers. This ensures that the corporation adheres to proper governance practices.
- Proof of Compliance: The minute book provides evidence that the corporation is complying with legal and regulatory requirements. This is especially important in the event of an audit, legal proceedings, or when you need to show potential investors or lenders that the corporation is being responsibly managed. The first point of a CRA audit is the Minute Book!
- Facilitates Transactions: Having an up-to-date minute book is essential during major business transactions like mergers, acquisitions, or financing. It simplifies the due diligence process and can help avoid delays.
- Ownership Records: The minute book also contains the share register, which is critical for tracking ownership and transferring shares.
How Often It Needs to Be Updated
It should be updated annually and or whenever significant corporate actions are taken. This includes:
- Annual Updates: At a minimum, the minute book should be updated annually to reflect the annual meetings of shareholders and directors. This includes recording the election of directors, approval of financial statements, and other key decisions.
- Changes in Directors or Officers: Any changes in the board of directors or officers should be promptly recorded.
- Issuance or Transfer of Shares: Whenever new shares are issued or existing shares are transferred, the minute book should be updated.
- Major Corporate Actions: Any significant corporate events, such as amendments to by-laws, mergers, acquisitions, or changes in the corporation’s structure, should be recorded as they occur.
Keeping it updated is crucial to maintaining the legal standing and operational integrity of your corporation. Neglecting to do so can lead to legal issues, fines, or challenges in proving corporate compliance.
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Read our latest blog post on Whether to Incorporate Regionally or Federally in Canada