What is a minute book?
PARTNER: Use Ownr.co to track your minute books
A minute book is a binder or virtual folder containing all the company’s essential legal and administrative documents. It typically includes:
- Certificate of incorporation: this is your corporation's birth certificate
- Bylaws: Rules that govern the internal management of the company.
- Meeting minutes: Detailed records of what was discussed and decided in meetings of shareholders and directors.
- Resolutions: Formal decisions made by the board of directors or shareholders.
- Stock certificates and share register: Record of shareholders and how many shares of each class of shares they own.
- Corporate annual returns: Yearly requirement to update the provincial registries of any changes to address, shareholders, directors, officers and agents. And, of course, there's a fee to pay — think of it like your annual vehicle registration.
- Agreements: Unanimous shareholder agreements and any other legally significant corporation contracts can be included here.
Why is a minute book important?
Sounds boring? You’ll learn that a minute book is crucial for many reasons:
Legal compliance
Having a minute book isn’t just a suggestion — it’s technically the law in Canada and no other document is more official than this.
Record keeping
Having all your important corporate documents in one place isn’t just convenient. It’s a lifesaver when something significant happens, and you need that info — a CRA audit may require this, and definitely any corporate share transaction, including merger, acquisition, dissolution, shareholder buy-out and corporate restructuring, to name a few.
Due diligence
Picture this: you’re ready to sell your business or bring in investors. A well-maintained minute book helps things go smoothly and builds confidence in the buyer's mind. Alternatively, poorly maintained or inaccurate corporate records will cast doubt and have the buyer second-guess everything. If the corporate documents are a mess, will they even want to know what shape everything else is in?
Corporate governance
If you have business partners, the meeting minutes are where you would document all the major decisions made, and the unanimous shareholder agreement is where you'd find the rules and regulations for how decisions are made in this corporation.
Audit trail
A minute book provides an essential audit trail about the decision-making process, ownership and compliance in case of legal, regulatory and shareholder disputes.
Best practices for maintaining a minute book
Update your minute book regularly
Whenever there’s a meeting of directors or shareholders, a change in share structure, or a change in strategic direction of the business, the decision should be documented in your minute book. At an absolute minimum, the corporate annual return must be filed annually.
PARTNER: Ownr.co acts as your online minute book manager, keeping all your documents organized and accessible on any device.
Ensure it’s accurate and complete
Accuracy is key. Double-check those entries and ensure you’re not missing anything crucial. You don’t want to deal with legal headaches down the road because of a tiny typo.
Store in a safe place
Keep that minute book safe and sound, like your business’s top-secret recipe. Consider a digital backup for some added peace of mind — you can never be too careful. Better yet, put your lawyer in charge of updating it — they'll charge $300 to $400/year.
Have it reviewed (professionally)
Get a professional set of eyes on it now and then. A lawyer or a chartered professional accountant (that’s us!) can give your minute book the once-over, making sure everything’s shipshape and compliant.
For incorporated small business owners, the minute book is not just a regulatory requirement; it’s a crucial record of your business’s legal health and administrative history. Ensuring that your minute book is well-maintained can save you from potential legal and administrative headaches in the future.
If you have specific questions or need help setting up or reviewing your minute book, consulting with a legal professional or a CPA is a good idea. Contact us for a chat.
Read more about Corporate Tax topics relevant to you and your small business. Don’t hesitate to reach out — we’re here to help make tax season a little brighter for you.
