Minute Books: Why They Are Essential For Your Business
Allan Madan, CA
What are “Minute Books?”
Your corporation’s Minute Book is an official record of your company’s activity including:
- Documentation that proves your corporation exists.
- The names of all shareholders, officers and directors that have been in the company since incorporation.
- Share transfers and insurance.
- Proof that every step was taken to activate the corporation after incorporation.
- Declaration of dividends.
- Documentations of the annual meeting of shareholders and directors, including resolutions or meeting minutes showing legislative requirements.
- Notices filed with government regulators as required by legislation.
- A record of sales of businesses or other major transactions involving your corporation that are out of the realm of its ordinary course of business.
When a Minute Book may be required
A Minute Book can be requested by lawyers, accountants, government agencies and other officials. If your Minute Book is not updated, a request to see it will leave you in a panic while you try to locate and update the Minute Book yourself. Here a few reasons when a Minute Book is requested:
- Your corporation wants to obtain financing
- A tax audit by the CRA
- A tax audit by WSIB
- Your accountant wants to review it to provide you with tax advice or corporate planning
- If a shareholder wants to sell his/her shares
- The passing of a shareholder
- You and another corporation want to unite to form one corporation
- A request to amend the Articles of Incorporation from your corporation
- A request to buy shares by a third party
- A request to buy the business of your corporation by a third party
The Risks of not properly maintaining a corporate Minute Book
You may suffer heavy tax consequences if you have a poorly maintained Minute Book. If any of the above situations occur and a request has been received to see your out of date Minute Book, your company might miss out on major business transactions or critical financing. The cost in tax could run you thousands or even millions of dollars, depending on your situation.
If you have been updating a Minute Book by yourself in your corporation and find it difficult to keep it on track, let your lawyer or accountant take responsibility of it. The price to keep a Minute Book is worth the amount of stress that will be lifted and it will be one less thing to worry about on your already busy plate. We can also guarantee that the Minute Book will always be up-to-date so you will not be hit with any surprise or unanticipated requests to see the Minute Book.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.