Minute Books: Why You Need One and Why You Should Update ItBy sedoo
If you are a director or shareholder of a corporation, do you know if your corporation has a minute book or if the minute book of your corporation is up to date? Often individuals, either personally or through another individual such as their accountant, will incorporate a corporation through the filing of articles of incorporation but nothing further is done for the corporation and no minute book was established.
The purpose of a minute book is to house all of the relevant documents of the corporation that should have been drafted and executed after the articles of incorporation were filed. Does your corporation have by-laws? Does your corporation have resolutions approving the by-laws, officers and directors? Has your corporation issued share certificates to the shareholders of the corporation? Without having by-laws properly in place and approved by resolutions of the directors and shareholders, the basis for your corporation being able to borrow money or acquire land and other assets has not been established. Furthermore, if you are acting as a director or officer of a corporation, was there a resolution of the shareholders passed to allow for you to continue in your position?
The purpose of the minute book is also to outline the transaction history of the corporation, such as when officers and directors were elected or resigned or when shares were issued or transferred. Without an up to date minute book any events that have transpired for the corporation have not been properly evidenced.
Not keeping a minute book up to date is problematic if you intend to buy or sell land through the corporation or enter into any business transaction as the minute book of the corporation will have to be brought up to date by your accountant or lawyer as a precondition for closing and it is a general requirement under both the Ontario Business Corporations Act and the Canada Business Corporations Act that a corporation is to maintain an up-to-date minute book for the corporation.
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