“What is as minute book?” We get this question a lot. Many entrepreneurs incorporate and operate their business without having a clue as to what a minute book is. It is quite common for businesses to operate for years without the need to create a minute book. However, in this article, we will explain in detail what a minute book is and why it is important for the proper management of your business.
1. WHAT IS A CORPORATE MINUTE BOOK?
The corporate minute book is a set of documents that constitute the official and primary record of the activities of your corporation, beginning at incorporation. It contains all the relevant records relating to directors, officers, and shareholders of the corporation. It is also used to store all important corporate documents, such as documents concerning the creation and the management of the corporation. As such, it stores all material corporate transactions that affect and involve your corporation.
Your minute book usually contains the following documents:
- The articles of incorporation
- The corporation’s by-laws
- Minutes of the directors’ and shareholders’ meetings
- Directors’ and shareholders’ resolutions
- Share certificates issued to the shareholders of the corporation
- Shareholder, officer, and director registers and ledgers
- Share transfers and any other documents relevant to transactions of the corporation.
The minute book is usually assembled as a binder which has all documents detailed above. However, depending on your preference, you can choose to have an electronic minute book only, with all the relevant documents saved in a computer file. This paperless option makes it easier for minute book updates. You can also choose to have a physical minute book with an electronic copy.
2. WHY DO YOU NEED A CORPORATE MINUTE BOOK?
Firstly, all corporations registered under the Quebec Business Corporations Act or the Canada Business Corporations Act are required to keep an up to date and organized minute book.
Then, it is important to keep excellent paper records of the management of your corporation for many practical reasons. Over the life of the corporation, you will be asked to provide your corporate records on numerous occasions. It is very likely that someday, someone is going to ask to review your minute book and you need to be prepared for that scenario. Let us have a quick look at a few instances when you may have to provide your corporation’s minute book.
A. Financing
If you intend on obtaining financing for your business, whether through venture capital or more traditional financing with a bank or other financial institution, then you must know that the minute book shall be examined by the lenders and investors. Since your minute book is the official record of your corporation, it will be among the first set of documents reviewed by lenders and investors.
Moreover, you may be required in the context of a financing or a commercial transaction to provide a legal opinion regarding the corporation. A legal opinion is an opinion given by the corporation’s counsel with respect to the affairs of the corporation, which is sometimes requested by lenders and investors during a financing or a commercial transaction. Such parties rely on the legal opinion as an additional due diligence process to conclude the transaction. To provide the legal opinion, your counsel must have access to and review your minute book.
B. Sale of Business
If you intend on selling your business (whether through a sale of shares or assets) at some point, you will be asked by the purchaser to provide the minute book of the corporation, which records the identity of the shareholders, directors and officers of the corporation, as well other critical information regarding your business.
3. CONCLUSION
Any major business operation involving a third party such a loan, an investment or a commercial transaction shall require the review of your corporation’s minute book. As such, there are many advantages to maintaining an up to date and well-organized minute:
It makes a good impression on lenders and investors, because it shows that your business operations are well organized; and
You avoid the annoying and expensive process of recreating your minute book and ratifying all past actions.
Please contact us if you need a minute book for your corporation.
Information provided in this article is intended as general introductory information only. The information provided in this article is not legal advice. It should not be construed as legal advice and should not be relied upon as such. Should you want legal advice regarding the information provided in this article, please contact one of our lawyers.
