If your small business is incorporated, you should be keeping a corporate minute book. Many business owners, however, are not aware of what a corporate minute book is or what it should contain.
What is a corporate minute book?
A corporate minute book is a binder filled with your company’s documents and records. As such, it serves as the primary record of your corporation’s activities.
Your corporate minute book should include your company’s:
- Articles of Incorporation
- Minutes of Meetings
- Resolutions of the Directors and Officers
- Notices and Registrations that have been filed with the Registry
- Directors’ Register
- Officer’s Register
- Shareholders’ Register
- Share Certificates
- Share transfers and any other documents relevant to transactions of the corporation
If you have a Shareholders’ Agreement, you will also need to include this.
While your corporate minute book is available for you to refer to as needed, it is also subject to governmental review.
Why keep a corporate minute book?
The BC Business Corporations Act requires you to maintain the company records listed above, amongst others. If you do not maintain these records and have them available for viewing, you can be convicted of an offense under the Act and fined up to $5,000.
2. Investment requests
Your corporate minute book proves that your business is valid and properly structured. It also provides a record of all current and past shareholders, and the consideration that was given for their shares. Given this, it should come as no surprise that most investors want to review a corporate minute book before putting in any money into a business.
3. Bank loans
Your corporate structure will also be important to banks if you are looking for a business loan. They will specifically want to examine your articles or shareholder agreement to confirm which of the company’s directors and officers are allowed to borrow money.
4. Selling your corporation
Selling a business is a complex process and buyers expect to review your company’s records. During the due diligence process by the buyer, you will have to show the transactions of the corporation from the point of incorporation through to the point of sale. The best way to provide this information is through your corporate minute book.
5. Governmental review
There are a number of government agencies that can request access to your corporate minute book as well. For example, the Canada Revenue Agency may want to review the ownership breakdown in your company, or the list of directors who are responsible for paying the company’s taxes. All government requests for access to your corporate minute book must be accepted.
6. Transferring ownership
Transferring ownership to another shareholder cannot be completed without your corporate minute book as you will need to demonstrate that you have ownership of the shares in order to transfer them.
Some business owners believe they can wait until they need a corporate minute book to create one. While it is possible for some people to pull this off, doing so is costly and time consuming. There is also always the risk of not being able to get the required materials in time, leading to potentially disastrous consequences for your business. That is why we suggest keeping your corporate minute book up-to-date from the start.
Are you having difficulty setting up or maintaining your corporate minute book? A small business lawyer can assist you. Get in touch with us today to book an appointment with one of our expert small business lawyers.