New Ontario Rules Display The Importance of a Minute Book in Corporations

Considering incorporating your business or maybe have already done so? If so, you have probably heard the term minute book. What exactly is a minute book, and why is it essential to have one? Some recent amendments to the Canada Business Corporations Act exemplify the answer to this question.

Significant Control:

Effective June 13, 2019, the CBCA requires private corporations to establish and update a register of individuals with significant control over the corporation. Someone with significant control is defined as the registered or beneficial owner, or someone that has control over any number of shares that amounts to 25+% of the corporation’s outstanding shares measured by fair market value or 25+% of the voting rights attached to the corporation’s outstanding shares measured by fair market value. In simpler terms, an individual with significant control is someone who has direct or indirect control that, if exercised, would “control in fact” significant matters of the corporation.

For example, we can glance at a circumstance that occurs rather commonly within the corporate industry. Let’s say that an individual wanted to invest within a corporation without having to be the legal owner of the shares they wish to purchase. In some cases, this individual will have another person registering as the legal owner of the shares, but as a trustee and, therefore a beneficiary for that individual.

With this regulation in place, an instance like this would not be permitted, as the required information for the individual wishing to purchase the shares would have to be listed within the register. You can maintain a register using a minute book, keeping all the information in one place, which is why it is not only legally necessary to have one but highly recommended for managing all your corporate registry information.

Access to the register:

Another regulation that was introduced was access to the register. This requires all corporations to allow registered individuals access to their registers. For example, if a creditor wants to know who works at a company, they can request information regarding their matter through the register. This would then enable them to access the minute book, and you can provide them with the subsequent information in a timely and organized fashion.

Non-Compliance:

There can be significant penalties for non-compliance with the regulations listed above. For example, here are some fines for specific scenarios:

  • Corporations that fail to maintain an accurate register may be liable for up to a fine of $5,000
  • Directors or Officers who permit the failure to meet requirements for maintaining an accurate register may be fined up to $200,000
  • Shareholders who knowingly fail to supply information at the request of the corporation for a register may be fined up to $200,000

Maintaining a register is not only legally enforceable but is highly recommended for the organization of information in a private corporation. Therefore, creating and updating a minute book regularly for the corporation you are responsible for is suggested.

We can assist you in creating and maintaining a minute book for your corporation. This material is for informational purposes only and should not be relied upon as legal advice and is solely in accordance with the laws of Ontario. To book a consultation with Buzaker Law Firm regarding registry requirements in Ontario, contact us at: info@vblegal.ca or (905) 370 – 0484.

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