Articles & Resources
The Guide To Minute Books
What is a Minute Book?
Once the corporation has been organized, every corporation requires a book to record all the activities of the corporation and a history of all the important decisions, which is called a Minute Book. It is the story of a corporation’s life from beginning (incorporation) to end (dissolution).
This book is REQUIRED by Ontario law (otherwise the directors may be hit with a fine of up to $2,000, and the company for $25,000!). Maintenance of this book be the last thing on a business owner's mind, as they are typically more focused on running their business, or they are unaware they even need one, which is required by law.
While it may not be a priority for a business owner to ensure the corporation’s activities are recorded, when the time comes for the company to sell its business, or for the corporation to obtain a loan from the bank, if the corporation's minute book is not up to date, the transaction may be delayed until such time and lead to increased legal costs.
Even more important is a situation that happens all too often, where there’s a dispute between owners, and there is no documentation showing who owns what percent of the company. We have dealt with clients before where both parties are claiming they own the company 100%! A minute book would have saved them such headaches.
What are some events that should be recorded in a Minute Book?
- Buying or selling the business or land owned by the corporation
- Change in directors
- Getting a loan for the corporation/giving out a loan from the corporation
- a corporation may change its registered address
- owners of the corporation may change over time.
How do I record these events in a Minute Book?
Some major decisions of a company need to be decided by voting of the directors or shareholders. The voting is typically done by directors or shareholders meeting at a certain time and location, and voting yes or no on decisions. Some companies are a one-man army, meaning one person is the director, officer and shareholder for the company, in which case it doesn’t make much sense for him to have a meeting with himself. In such cases, the law allows for a written resolution to be done instead of all the formalities of a meeting.
What are the documents in a Minute Book?
By-law 1 - Govern the day-to-day activities of the corporation and deals with matters such how many people need to be in attendance for a meeting to pass a resolution (when a decision is voted on and passes), payment of dividends, etc.
By-law 2 - Provides who has authority to borrow on behalf of the company. Banks frequently wish to see this by-law if the company wishes to borrow money.
Consent to act as a Director - Directors need to consent to act as directors, so the director’s name is not put on the public record without his or her consent.
Exemption from Appointment of an Auditor - Ontario law requireS that all owners decide whether or not to have an audit performed or not. it is possible to waive the audit requirements, which is wise for some companies since it can be costly to have audited financial statements.
Director and Officer Register - containing each director’s name, address, and dates of start and end/resignation;
Shareholder Register - containing the names of the shareholders of the corporation;
Transfer Register - containing all transfers of shares from who to who; and
Property Register - containing all of the corporation’s interests in any real property located within Ontario.
Share Certificate - This certificate is proof of your ownership
What are the filings I need to do?
- Corporate Tax Filings – it is best you have an accountant do this for you.
- Form 1 - Once a corporation is incorporated under Ontario law, the government requires the corporation to file a Form 1 - Initial Return within 60 days of incorporation, which sets out the registered address, the directors and the officers of the corporation. Each time a change to this information occurs, a Notice of Change form is required to be filed within 15 days of such change.
- Annual Return – this may be filed by the corporation’s accountants together with the corporation’s corporate tax return, or it can be filed independently within six months after the end of each tax year – it helps keep the government’s databases up to date about some basic information about your company.
Please note the content on this web site is provided for general information purposes only and does not constitute legal or other professional advice of any kind.