Every corporation needs bylaws, director resolutions, shareholder resolutions, share certificates, share registers and ledgers, and director/officer registers. These documents are typically kept in a binder which is called a “minute book”.
In addition to a minute book being required by law, you will also need a properly maintained minute book for various situations during the life of your business. Here area few examples:
If you own the corporation with anyone else, the minute book is essential as it contains the legal documents evidencing the rights and ownership of each of the owners (called “shareholders”).
If you apply for a bank loan for the corporation, the minute book is often one of the first things the bank will want to review to verify that the corporation is authorized to make the borrowing.
If you are selling your incorporated business in the future, the potential buyer will want to review the minute book.
If Canada Revenue Agency audits your corporation, they will want to see the minute book to verify that the legal documents match up with and support what the corporation has reported in its tax returns.
If you don’t have a minute book, or if the minute book isn’t properly documented and maintained, the rights between you and the other owners will be ambiguous which can result in very messy conflict, Canada Revenue Agency can deny any claims not supported by legal documents, and you will need to create a minute book to obtain a bank loan or sell your business.
A minute book can be created at any point; however, creating a minute book after the fact often costs much more than creating and maintaining a proper minute book from the start.