Calgary’s Rob Peers urges businesses: “keep minute books current”

Forming and operating a business is full of daily responsibilities and obligations that can have a business owner working well before nine and long after the five o’clock punch out. With the many duties leading a company entails, it’s no surprise that many business owners fall behind in their scheduled minute book updates.  That’s assuming they have created a schedule at all.

Needless to say, keeping an accurate and up-to-date minute book for your business is not only crucial for the viability and longevity of your company, it’s in many cases a legal obligation.

Keeping minute books for a company is a legal requirement for all corporations. Last month, the city of New Haven, Connecticut made headlines when a city employee shredded important documents without proper notice or permission. “On the website for the Office of Public Records Administration (http://ctstatelibrary.org/publicrecords/), there is a list governing how long municipalities have to keep documents and a form to be submitted to the office detailing what they want to destroy,” The New Haven Register reported (http://www.nhregister.com/general-news/20150805/state-new-haven-failed-to-file-proper-notification-of-document-destruction). “There is a lengthy description of various records and a disposal schedule.”

The article went on to list the examples of documents that could and could not be destroyed.  Intergovernmental agreements, for example, must be kept for at least five years after they have expired. Construction contracts can be disposed of six years after a project is completed.  Meanwhile, policies and procedure documents can’t be destroyed and annual reports and minutes must also be permanent.

Knowing what to record, how to properly log it and the duration a document needs to be stored can be confusing and tedious to a business owner who has plenty of other responsibilities to tend to. However, a well maintained minute book can save time and headaches in the long run.

In fact, it is easier to regularly update a book then to try to go back over long periods of time and reconstruct one.  Regularly updating minute books can also save money.

“An outdated minute book creates obstacles when the time comes to do any restructuring of the corporation. If the filing of the annual return has been neglected, it can cause a problem if the corporation has been struck off the corporate register and you need to confirm the shareholdings to get it reinstated.”  This according to the WMCZ Legal Idea’s website (http://wmcz.com/legal-ideas/keeping-minute-books-up-to-date-can-save-you-money/).

Keeping the minute book up to date also saves money. It is less expensive to update information as it happens instead of paying a lawyer or accountant an hourly rate to decipher stacks of documents and conflicting information to rebuild the minute book.

The Canadian government outlines the guidelines for minute books on their official website (https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs04847.html).. Articles of Incorporation, by-laws and their amendments and any unanimous shareholder agreements; minutes of meetings and resolutions of shareholders must all be made available upon request of shareholders and creditors.

Rob Peers (https://about.me/robpeers), founder and director of C2 Business Services (http://www.c2your.biz/) in Calgary, Alberta, has more than fifteen years of experience as a local and international consultant, with a focus on business development, finance, tax, and business structure.

Rob Peers offers this advice to business owners (https://twitter.com/rob_peers) about minute books. “[Minute books] should contain your incorporation papers and share certificates, a detailed list of company by-laws, as well as the annual renewal paperwork between your company and the provincial and/or federal governments and all tax receipts and papers; minutes pertaining to your annual general meeting, resolutions or decisions made by the board of directors, shareholders and officers, and all financial statements and contracts.”

Failure to keep regularly-maintained minute books can lead to audits that can cost thousands of dollars in penalties and fees. “It’s good company policy to regularly update them [company minute books].  It also reflects favorably on your business if and when the book is requested,” Rob Peers adds. “Getting a company vehicle, applying for a bank loan and transferring your business to a family member all require the careful examination of the minute book. Potential investors may also request a look to assure the pending investment is sound.”

Minute books are your company’s historical record and paper trail, and the bottom line is that it’s imperative they are maintained with the highest regard. Rob Peers recommends setting a bi-annual schedule to review and update the minute book in order to avoid the hassle of trying to decipher it in the midst of an audit or investment transaction.