3 Critical Reasons to Keep Corporate Minute Books Up To Date
Unfortunately, keeping the minute books of a small business corporation up to date is often a low-priority task; however, these records are essential and required by law. Here are 3 critical reasons for keeping corporate records up to date.
1. Minute books leave a paper trail of records and documents that allow lawyers, accountants, creditors, officers, directors and shareholders to look back at the corporation’s organizational history, transactions and decisions. The minute book, in this way, is an important tool for legal and accounting, auditing and control. These records are needed for legal transactions, financial reporting, tax, lending, banking, or other purposes.
2. The minute book contains records of financial agreements or transactions, including dividends and other compensation. This information is important for income tax purposes. If dividends or other payments are not properly authorized and recorded, the transactions can be rejected by the Canada Revenue Agency and confusion can arise when preparing an audit or income tax return.
3. Minute books provide a repository for other key legal contracts, such as executive or director employment agreements, shareholder agreements, and other contracts. It is important to retain these documents because, among other reasons, they may represent long-term commitments by the corporation.
If your company's records are not current, scheduling an appointment with a lawyer is a very wise idea. Not only will the lawyer help to update the records, but they can also help formulate a minute book maintenance schedule for the future.
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Articles on this blog are general in nature and are provided for informational purposes only. Use of this blog does not provide or replace individualized legal advice and does not create a solicitor-client relationship with our firm. Users who require legal advice on a particular matter should consult directly with Mr. Eric Cohen, Barrister & Solicitor, an Ontario lawyer or a competent lawyer in their Province or State.