Does a corporation operating in Ontario require a minute book?
Yes, all corporations (whether it is an Ontario Corporation or a Federal Canadian Corporation) are required by law to maintain a minute book with up-to-date and accurate records.
What exactly is a minute book?
A corporate minute book is a collection of documents which includes the following:
1. Articles of Incorporation
A legal document that is submitted to the Provincial or Federal government in order to establish or form the corporation. As it is registered with the government, a copy of the Articles of Incorporation can be obtained from the Ministry at any time. If any changes are made to the Articles, the corporation must file and keep the Articles of Amendment within the minute book.
A Corporation is a separate legal entity and since it operated by an individual or multiple individuals or entities, the by-laws serve as rules that govern the internal operations of a corporation that the individuals within have to follow.
3. Minutes and Resolutions of Shareholders and Directors
A resolution is a written document that either the directors or shareholders sign/execute in order to approve or consent to actions (or business transactions you may call) of a corporation. Some actions may require a directors resolution (approval by the directors), some actions may require a shareholders resolution (approval by the shareholders) and some may require both. In addition, some actions may require majority, unanimous or other specified percentage of the directors or shareholders to approve. To figure out what type of resolution is required for a specific corporate action, the applicable sections of the corporation by-laws, governing Act (Business Corporations Act (Ontario) or Canada Business Corporations Act), and unanimous shareholders agreement (if drafted) must be observed .
Minutes are notes that are recorded during a directors or shareholders meeting which highlight the key issues that are discussed, motions proposed or voted on, and activities to be undertaken.
4. Shareholder Agreement
A shareholder agreement is an agreement between the shareholders of a company which sets out the shareholders’ rights, privileges and obligations along with items such as how a corporation will be setup, managed and run. It is not mandatory, however, highly recommended in order to eliminate disagreements between shareholders and ensure that everyone is on the same page.
A shareholder agreement binds only the shareholders that signed the agreement. In comparison, a unanimous shareholders’ agreement (signed by all shareholders) has the authority to restrict a corporation’s directors’ powers and grant such powers to the shareholders of a corporation.
5. Directors Register
A document that lists the name of each director, their residential address, Canadian residency status, date appointed and if applicable, date ceased to be a director.
6. Officers Register
A document that lists the name of each officer, their residential address, Canadian residency status, date appointed and if applicable, date ceased to be an officer.
7. Shareholders Register
A document that lists the names, addresses and details of shares held.
8. Shareholders Ledger
A separate document that lists the holdings of each shareholder. For each shareholder, a ledger includes the date shares were received, certificate number, transfer number, from or to whom the shares were transferred, number of shares sold or purchased and the balance of shares.
9. Transfers Register
A document that lists details about each share transfer, including the date of transfer, certificate number, number of shares transferred, and from and to whom the shares are transferred.
10. Ontario Real Property Register
Applicable for Ontario Corporations as per the Business Corporations Act (Ontario), requires an Ontario corporation to maintain a list which identifies each property the corporation has acquired and if applicable, disposed of. It must include the date it was acquired, date it was disposed if applicable, legal description, registry/land titles division, property identifier number, assessment roll number and municipal address.
11. Share Certificates
A share certificate is evidence of ownership of shares and basically acts as a receipt for the purchase and ownership of shares in the company.
12. Forms Filed
Any forms that are filed with the government entities, e.g. Initial Return/Notice of Change.
Where is a minute book kept?
It is usually kept at the registered office of a corporation or the corporation’s lawyer’s office. It can also be kept electronically (such as a cloud folder), however, extra precautions such as limiting unauthorized access and manipulation are required for electronic storage.
It is important to have an up to date minute book easily accessible in order to not only avoid government imposed penalties but also to avoid private lawsuits, tax issues and interruption of your corporation’s business.
If you are setting up a new corporation and require help drafting a minute book or have any questions or concerns with respect to business law in general, contact us at Sukh Law.
Sukh Law publishes articles for information purposes only and is not intended to constitute legal advice.