Are you incorporating your business? If so, it is probable that you have heard the term minute book. What exactly is a minute book, and why is it essential to have one? These rather recent amendments to the Canada Business Corporations Act exemplify the answer to this question.
Significant Control:
Effective from June 13 in 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 that has direct or indirect control, that if exercised would “control in fact” significant matters of the corporation.
As an example, we can glance at a circumstance that takes place 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 register. 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 large penalties for non-compliance with the regulations listed above. For example, here are some fines for certain 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 maintain 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 to maintain for organization of information in a private corporation. Therefore, it is suggested to create and update a minute book regularly for the corporation for which you are responsible for.
We can assist you in the creation and maintenance of 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.
Contact Us
To book a consultation with Buzaker Law Firm regarding registry requirements in Ontario, contact us at: info@vblegal.ca or (905) 370 – 0484.