Is your minute book up to date?
There are three possible answers to this question:
- Yes, of course !
- No, not for some time…
- My…what?
Don’t worry; all of these answers are completely normal! The minute book is often overlooked. The Canada Business Corporations Act (Canada Inc.) and the Business Corporations Act (Quebec) (Quebec Inc.) require a corporation to have a minute book and to keep it up to date. This responsibility falls on the board of directors of the corporation!
What is it?
The minute book is the history of the business from its beginnings (incorporation) to its “end” (dissolution or sale). The pages of this history explain the different essential steps in the life of the company. There are registers for shareholders, directors, shares and share transfers. Critical moments in the company’s life are mentioned through resolutions that are passed by the shareholders and/or directors, as the case may be. These moments can be dividend payments, confirmation of the mandate of the company’s accountant in charge of preparing its financial statements, change of the company’s registered office, change of the company’s name, change of the company’s fiscal year, etc. The minute book is completed by the company’s constitutive documents, i.e. the articles of incorporation, the by-laws, the minutes and even the shareholders’ agreement. It’s simple, as soon as there is a change, you must write a new chapter! Thus, any change in the shareholding or the directors must be listed and traceable.
What are the company’s duties?
Certain obligations are provided for by law. For example, an annual update must be made to the Registraire des Entreprises du Québec and/or an annual report must be filed with Corporations Canada. It is essential to make this declaration to avoid fees or the dissolution of the company after three consecutive failures. In addition, both the federal and Quebec laws provide fines for not keeping the minute book in compliance with the authorities’ requirements.
In addition, the company must hold an annual meeting of shareholders to report on the company’s situation. At this meeting, the shareholders are asked to adopt the financial statements and other resolutions necessary for the company’s proper functioning, such as the election of the directors who will sit on its board of directors for the next twelve months.
When can I be asked for my minute book?
As you may have guessed, the minute book must be kept up to date throughout the company’s life. It may be necessary to present its contents when opening a bank account at the beginning of the activities. Shareholders of a corporation are entitled to inspect (and take copies of) the minute book. This excludes minutes and resolutions of the board of directors and its committees. This is part of their “right to information”; a pillar concept of corporate law. More commonly, it is necessary to share the contents of the minute book during due diligence or a transaction. Indeed, the book records all the entries and arrivals in the company and all the changes over time. Therefore, it is normal for investors to consult it before subscribing for shares in your company or proceeding with a partial or complete buyout.
What happens if I don’t have one or if I lost my minute book?
Propulsio 360 can help you create a new book that reflects your current situation. It’s never too late to comply with laws and regulations. 😊
Frédérique Lissoir
Partner & co-founder