Now that you’ve incorporated your business, you’re required to keep certain corporate records. While this might seem like a pain at first, maintaining accurate and up-to-date records of your corporation is important. Doing so avoids costs, problems, and aggravation down the road.

By law, a corporation in Ontario must prepare and maintain the following records:

1.   Articles of incorporation and by-laws (and any amendments to these)

2.   A copy of any unanimous shareholders agreement (if there is one)

3.   Minutes of shareholders meetings and resolutions

4.   A register of directors setting out the names, addresses, and dates each became and ceased to be a director

5.   A securities register listing the names and addresses of all shareholders and details of the shares held

6.   Minutes of directors meetings and resolutions

7.   A transfer register setting out all transfers of securities, with the date and particulars of each transfer

8.   Accounting records

These items must be stored at the corporation’s registered office or at any other place in Ontario as designated by the directors. Upon request, a corporation’s shareholders or creditors are legally entitled to examine items #1-5 and make extracts free of charge.

Minute Books

With the exception of #8, the items listed above are typically kept together in a binder called a “minute book.” Most companies in fact keep the minute book and any related records at their lawyer’s office, and most law firms have specialized staff whose job is to keep corporate minute books in good order.

There are many reasons why maintaining a current minute book is important. Your minute book is your official source of corporate documents. It demonstrates share ownership by reflecting who owns what shares and when shares were transferred or issued. It also leaves a trail of the decisions and transactions of the corporation, and shows what decision-makers have the authority to act. 

Keep in mind that, unlike a real person, a corporation is a fictional thing – a piece of paper – so a corporation’s actions exist in pieces of paper as well. Things that are not properly documented often have simply not legally happened. 

If that isn’t enough to convince you, consider this. Minute books establish the record of your corporation that is a very important factor in corporate transactions, such as a financing deal or the sale of your business. The other party to the transaction will be looking carefully at your minute books. Aside from reflecting poorly on your business, an inaccurate or out-of-date minute book can add costs and delay, or even endanger your deal.

Minutes of Meetings

As you would expect, “minutes” go in your minute book. Minutes are a written record of meetings of shareholders or directors. Minutes usually include where and when the meeting was held, who attended, and any decisions made. If a resolution is passed at the meeting, this should be reflected in the minutes. One person is usually designated as “secretary” of the meeting to produce the minutes. Once completed, they are often circulated to all attendees to ensure that they are accurate, and then signed by that secretary and the person who chaired the meeting to certify their accuracy.

A resolution is an action taken by the board of directors of a corporation. For example, the directors must pass a resolution to issue shares to an investor. Resolutions can be passed at meetings by a majority vote, in which case they should be recorded in the minutes. Alternatively, if you don’t want to hold a formal meeting you can put the resolution in writing and have 100% of the directors sign it.

Shareholders also sometimes have resolutions. There are two types of shareholder resolutions: ordinary and special. An ordinary resolution must be passed by a majority of the votes cast at a shareholders meeting to be effective. Special resolutions (for major corporate changes, such as creating a new class of shares, or selling the whole business of the company) require at least 2/3rds of the votes cast at a shareholders meeting to be effective. If you don’t want to have a shareholders’ meeting, you can put the resolution in writing, but in that case, whether it’s ordinary or special, 100% of the shareholders have to sign it. 

Annual Shareholders Meetings

The law requires that a corporation have its first annual shareholders meeting no later than 18 months after incorporation, and no later than 15 months after the previous annual shareholders meeting. By law, the financial statements have to be provided to the shareholders with the notice of the annual meeting. At the meeting, directors are typically elected and auditors are appointed. If you don’t want to have a formal shareholders meeting, these resolutions can be passed in writing in the normal way (see above).

An Ontario corporation must file the following forms:

1.   Initial Return – filed with the Ministry of Government Services (MGS) within 60 days of the date of incorporation

2.   Income Tax Return - filed with the Canada Revenue Agency (CRA) within 6 months of the financial year end of the corporation

3.   Ontario Corporate Tax Return – filed with the Minister of Finance within 6 months of the financial year end of the corporation

4.   Annual Return – filed along with the Ontario Corporate Tax Return

5.   Notice of Change form – filed with the MGS within 15 days of any change in the directors, officers, or registered office address of the corporation

6.   Goods and Services Tax Return - filed with the CRA either quarterly or annually. (See our separate Essentials topic on GST for more information.)

7.   Any other reports or returns required by other jurisdictions where you carry on business or are licensed or registered.

© 2007 SHIBLEY RIGHTON LLP. All rights reserved.

This summary is a general overview for the assistance of clients. It is no substitute for advice from an experienced and knowledgeable advisor, with full knowledge of the facts and issues relating to your particular situation. Please contact us, we would be happy to assist