Should I keep my own Corporate Records?

Should I keep my own minute book?

If you have incorporated a company or are thinking of incorporating, you will need to consider how your company will comply with the statutory requirements for record-keeping. Companies incorporated or continued into British Columbia are subject to the BC Business Corporations Act, which obligates each company (or its agent) to prepare and maintain specific records at a registered and records office in BC. The registered office is the primary location where corporate inquiries, notices and documents are directed and dealt with. The records office is the location where the company’s corporate records are maintained and can be made available for inspection to appropriate parties. The registered office and records office are often the same location but are not necessarily so, and the location, or any changes, must be registered with the BC corporate registrar.

What are the corporate records, and what does the records office do?

The corporate records need to be prepared in compliance with applicable corporate laws, and it is the responsibility of the records office to attend to keeping the corporate records accurate and secure. These records comprise the company’s “minute book”, an electronic or physical collection of documents including the articles and incorporation certificate, shareholder and director resolutions, share certificates and subscriptions, register of directors and central securities register, and transparency register, to name a few.

Every year, a company must conduct certain annual corporate business and the records office prepares and files the Annual Report and Annual General Meeting Minutes, or alternatively, shareholder and director Consent Resolutions in lieu of an AGM. The records office must also provide access to various parties authorized under the Act to examine all or some of the corporate records. These activities must be properly attended to in order to maintain the company’s existence and in good standing.

Is it worth it to keep my own records?

While there is no strict requirement that the records be kept by a lawyer’s office, the preparation of annual reports, annual resolutions, and minutes of annual meetings does require a working knowledge of the applicable laws to avoid potential pitfalls and errors, and it can be time consuming and costly to attempt to rectify the minute book deficiencies if things have not been recorded properly.

If you are looking to sell shares of your company or obtain financing secured by the company, the prospective buyer or lender will certainly be scrutinizing the minute book to ensure the company is able to undertake the transaction and its records are complete and in order.

Further, a company that neglects to file an Annual Report for two consecutive years will find itself at risk of being struck from the registry and ownership of its assets being transferred to the Provincial Government, necessitating a lengthy and expensive restoration process.

In summary, while some individuals possess the requisite knowledge and ability required to keep their own minute book, those people tend to be few and far between! So, when it comes to keeping your corporate records, our advice is to leave it to the experts and avoid a situation where you are facing a tight deadline or risk losing a sale or financing. The fees are relatively small compared to the cost and hassle of performing retroactive repairs, and you can enjoy the peace of mind that comes with having your company’s records in order.

Our business lawyers are always happy to speak with you on this topic if you would like further information.

© Linley Welwood LLP. The contents of this article do not constitute legal advice. Readers should seek legal advice in relation to their own specific circumstances.