Does my corporation need a formal minute book?
A corporation is legally required to maintain a minute book. But what is a minute book?
Well, simply put, it’s a binder containing key corporate documents such as the Certificate of Incorporation, Articles of Incorporation, by-laws, notices, director’s resolutions, shareholder resolutions, share certificates, share registers, director registers, and other records.
The minute book, when properly assembled, tells a story about who is running the corporation, who owns the corporation, what the operational corporate rules are, and how the corporation generally looks from a financial perspective.
Most people enlist the aid of a law firm to incorporate their business and initially prepare a minute book. From there, a corporation can appoint a law firm, such as Lift Legal to act as its records office. A yearly fee is paid to have the minute book maintained. If this is the decision you make as a business owner, you can rest assured that your minute book will stay up to date.
HOW DOES MY MINUTE BOOK IMPACT THE VALUE OF MY BUSINESS?
Many small corporations choose to maintain the minute book themselves– and that’s just fine. The only problem is that the minute book often gets stuffed in a closet and ignored until a major change to the corporation, such as the sale of the business, occurs. There are some consequences to this:
First, all corporations are legally required to file annual returns and to prepare certain resolutions and other documents each year. Similarly, corporations are legally required to have certain documents such as a share register in their minute books. When a minute book is ignored, a corporation is technically in breach of the Business Corporations Act and does not have any accurate record of its status.
Second, a well-managed business is inherently more attractive and valuable than one that has ignored its record keeping – properly maintaining your minute book is one of the ways that business owners can maximize their business’ worth when looking to sell or encourage investment.
Third, if your business grows and becomes successful there will come a time when the contents of the minute book become crucial to its continued growth and success. Although business lawyers like us are happy to rectify mistakes and omissions in minute books, the cost of this can outweigh the cost of simply having your minute book maintained by a law firm on an annual basis at the outset.
WHAT DOES A BUSINESS LAW FIRM DO IF IT MAINTAINS MY MINUTE BOOK?
- The law firm will act as your registered and records office and will keep the minute book at their office. A benefit of this is that if your business is every served, service will occur at the law firm. Further, if anyone is ever entitled to review the contents of your minute book this will occur at the law firm.
- The law firm will ensure that all legally required documents are in your minute book upon incorporation and that it is maintained as the corporation grows and changes.
- The law firm will draft all required annual documents each year, arrange for them to be signed and then file them in the minute book. These include the annual election of the corporation’s directors and officers.
- The law firm will file your annual return with corporate registry each year and will then file it in your minute book.
- The law firm will also be a resource to you should you wish to check on the details of your corporation.
HOW CAN LIFT LEGAL HELP?
If you have questions about minute book requirements, or any other issues that your corporation may be facing, please feel free to contact Lift Legal in St. Albert. We are happy to act as your registered and records office, maintain your minute book for you, and/or update your minute book if you have fallen behind on this.
