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  • Richard Fonagy

Don't Have a Corporate Minute Book? Your Corporation May Be In Jeopardy:





What is a corporate minute book? It is Required By Law


A minute book contains the constating documents (means articles of incorporation, amalgamation, or continuation, as applicable, by-laws and all amendments to such articles or by-laws) of your corporation, together with its bylaws, resolutions, ledgers, registers and share certificates. The article of incorporation are your charter, your constitution for your corporations. So you have:

  1. Articles of Incorporation - which is your charter or constitution for your corporation- your legal entity for your corporation which has been approved federally or provincially under the proper statute.

  2. Corporate Bylaws -

  3. Organizational Resolutions - are the initial resolutions of the minute book which set out, for the first time, the names of the directors and officers as well as issue shares to the shareholders. Also lists out when your fiscal year end is, who is your appointed accountant, registered office, bank lawyer etc...All of this must be resolved by law when you incorporate a company. That's why they are called organizational resolutions and contained in the minute book.

  4. Ledgers and Registers - listing of the directors, officers (which for small corporations are usually the same person), shareholders and real properties that the corporation may own.

  5. Physical share Certificates - stock certificates showing the shareholdings (common or preferred or both) of the corporation. These are extremely important.

When you incorporate online, the government does not tell you that all of this is required. Incorporating is only about 10% of the documents that are needed to be resolved. This ensures a valid corporation under the Ontario Corporations Business Act, or the Canada Corporation Business Act.

Each year that minute book needs to be updated, which are called "Annual Resolutions". This can take the form of an actual real meeting but most will just be a written resolution in lieu of an actual meeting.

The legislation requires that the shareholder's and director's (can be same person) confirm that they have reviewed and approved the annual financial statements prepared by the corporation's accountant. The corporate minute book will also contain any changes to the corporation, such as a change in registered office, directors, shareholders or fiscal year end. Any material contracts need to be approved. Did the company borrow money from the banks or get a line of credit, this would be listed in the book as well. Are there any guarantees or anything else that may be relevant and material. All contracts the corporation has entered into.


Although no one is going to "knock on your door" tomorrow if you do not have one, but if you need one for two important reasons:


  1. CRA Audit - if the CRA conducts a general audit, it will request to review your books. If you don't have a corporate minute book, it will draw an adverse inference which could result in penalties. If they feel you have not been compliant with corporate legislation, they may infer that you are not compliant with tax legislation.

  2. Sale of the Business - in the event of a sale of your business, you will need a minute book in order to gain access to the Lifetime Capital Gains Exemption which save you about $200,000 in tax. Only available if you sell the shares of your business. (It is important to remember, to access the life time capital gains exemption the corporation needs to be in good standing, therefore an incomplete minute book may be considered dis-qualifying as the corporation is not in good standing)


The corporate minute book also satisfies the buyers "due diligence" against the corporation and it is often discovered that one was never kept. So that is the first thing a lawyer who is soliciting the transaction is going to want to see. That raises red flags to the buyer and is advised by there lawyer appropriately. Does not look good to a buyer if it has not been updated or kept year to year.


Also, did we mention that it is required by law. So if you are someone who wants to do things properly and your corporation is in good standing.


Now, if you are an existing business but you do not have a corporate minute book- Don't worry- the law permits you to recreate one through a statutory declaration - can be done through a notary to save costs- or a lawyer.

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