Ontario BUSINESS Law: Minute book
What is a minute book? It is not something specifically mentioned in the OBCA, but rather a jargon used by legal professionals to describe a specific document binder, which every corporation has, that stores a list of records that the OBCA requires corporations to keep track of.1 This article will walk through the list of records one by one.
The first tab of the minute book includes documents related to the formation of the corporation - articles of incorporation, certificate of incorporation, articles of amendment, and consent to act as first director. We have discussed what articles of incorporation is in a previous article. Certificate of incorporation is a document issued by the government certifying the validity of a corporation’s registration. Articles of amendment refers to any amendment made to the articles of incorporation after the articles of incorporation is filed and recorded in the government’s system. Consent to act as first director is a form signed by non-incorporator directors to confirm their acceptance to act as the corporation’s directors. These documents constitute the most preliminary matters of the corporation.
The second tab includes the by-laws of the corporation. By-laws is the document that governs the detailed operation of the corporation and is different in nature from the preliminary documents of a corporation. Therefore it is kept in a separate tab from the preliminary documents. It is usually passed by directors on the first directors’ meeting, or by a director’s resolution.
The next tab is the resolutions and minutes tab (of course, a minutes book’s got to have minutes in it). There are two sets of resolutions and minutes - directors’ meeting minutes and directors’ resolutions, shareholders’ meeting minutes and shareholders’ resolutions. A meeting minutes is the notes taken at the meeting. It documents in writing what was discussed in a meeting, who voted yes and who voted no, who asked the secretary (the usual person in charge of keeping a minute) to record his objection, etc. This document is particularly important, because when disputes arise, such as when a shareholder files a breach of fiduciary claim against the directors, the directors can use the records from the directors’ meeting minutes as evidence to demonstrate that they exercised good faith judgment. Resolution is an alternative to meeting for decision making. When everyone has already agreed on a matter, there is no necessity to conduct a full meeting to approve a decision. In such circumstances, a resolution signed by shareholders or directors is sufficient. Notice, OBCA has different requirements for director and shareholder resolutions. Director resolutions must be signed by all directors entitled to vote on that matter.2 Shareholder resolutions usually only needs to be signed by the majority,3 except, for a matter that requires a special meeting of shareholder and in such cases an unanimous vote is required for all shares entitled to vote in the meeting on that matter.
The next item is a record of the corporation’s ownership interest in land. This requirement is only applicable to Ontario corporations' ownership interests of land in Ontario, which means that federal corporations, out of province corporations, or Ontario corporations’ land ownership interests outside of Ontario are not subject to this rule. For the ownership interests subject to this rule, the following information is required by the OBCA,4 (1) identificaiton of the land, (2) the date the corporation acquired and disposed the land, (3) any transactional document that contains the municipal address of the property, the land titles division and the property identifer of the property, the legal description of the property, and the assessment roll number of the property.
The next item, particularly important, with severe penalty attached when failed to comply, is the register of individuals with significant control of the corporation.5 The legislature added this item to the required list of records in 2023 as an effort to combat criminal and money laundering activities. The OBCA defines “individual with significant control” to be one who owns 25% or more voting rights or total outstanding share of a corporation, or one who has direct or indirect influence over the corporation regardless of his share ownership.6 The register must include the following information of such individuals: name, birth date, address, jurisdiction of residence for tax purposes, the day when such individual became and ceased to be an individual with significant control, description of how the individual hs significant control, and the reasonable steps the corporation took to determine the individuals with significant control.
The next tab contains the registers for directors, officers, shareholders and share transfers. The director’s register is a list of all the directors which shall also note the date when each individual became and ceased to be a director. The register for officers contains similar information. The shareholder register shall indicate when each shareholder purchased shares, the class of shares purchased and the number purchased, in addition to the personal information of the individual shareholders. It shall also reflect any changes in a shareholder’s ownership if he sold any share he previously owned. The last item in this tab is the record of share transfers. It shall keep track of all exchanges of shares between the corporation and individual shareholders, and amongst individual shareholders. This tab is important and should be updated timely as director liability is often tied to whether the director is still in position when a claim arose. Similarly, current shareholder ownership also matters for the purpose of determining meeting notice, dividend distribution, etc.
The next tab is the shareholder’s ledger. In this tab, there is one document for each individual shareholder. The document records all transactions related to an individual shareholder’s share ownership. The information in the ledger shall correspond to the information in the registers of shareholders and registers of share transfers in the previous tab. The ledger is a more direct representation of individual ownership in the corporation.
Lastly, there are three more items included in the minute book, share subscription, share certificates and change in directors. Share subscription is an application form signed by shareholders indicating their willingness to purchase shares. Once the application is accepted by the corporation, the sale of the share is consummated. Share certificate is a document issued to certify the shareholder’s ownership of the shares. Change in directors tab includes documents related to the change in directors, such as directors’ resolution, shareholders’ resolution, resignation letter, consent letter, etc. These documents provide additional clarity to the history of director changes.
This wraps up the items generally included in a minute book. It is by no means a simple task to keep track of all of these legally-required docuemnts, but the importance of keeping the house clean cannot be more emphasized.
1 Business Corporation Act, R.S.O. 1990, c. B.16, s. 140(1)
2 Business Corporation Act, R.S.O. 1990, c. B.16, s. 129(1)
3 Business Corporation Act, R.S.O. 1990, c. B.16, s. 1(1)
4 Business Corporation Act, R.S.O. 1990, c. B.16, s. 140.1
5 Business Corporation Act, R.S.O. 1990, c. B.16, s. 140.2
6 Business Corporation Act, R.S.O. 1990, c. B.16, s. 1.1
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