In general, whether a corporation is incorporated under Quebec’s Business Corporations Act or under the Canada Business Corporations Act, it must by law maintain a minute book which, among other things, contains the following information:
1) The Charter, including the Articles of Incorporation;
2) The Corporation’s By-laws;
3) The Corporation’s organization;
4) Shareholders’ agreements;
5) Transfer registries;
6) Shareholders’ and Directors’ resolutions;
7) Share Certificates; and
8) Any deeds that the corporation may have executed during the course of its existence;
Essentially, in a properly maintained minute book, we will be able to follow in chronological order, in particular, any change, modification or transfer of shares, change of directors, agreements, contracts, and commitments, which would directly bind the corporation and create legal obligations that the corporation must respect.
The minute book will bring to light the corporation’s history in a specific set of agreements and corporate transactions. For example, it should tell us whether a unanimous shareholders’ agreement exists, and if so, how it would affect the powers of the Board of Directors. Those powers may be restricted in some way or another. This is extremely important to be taken into consideration when the corporation is engaging in transactions.
Under Quebec law, a corporation constituted under the Business Corporations Act (CQLR, c.S-31.1) that is comprised of a sole shareholder is not required to fully comply with the requirements mentioned above. The law states (in section 217) that “such a shareholder may choose not to” hold “meetings of the board of directors” as “any act by such a sole shareholder on behalf of the corporation is deemed to be authorized.”
That is the sole shareholder’s prerogative under Quebec law. However, the credibility of a corporation which opts to maintain a minute book is far superior to one that does not.
A properly maintained minute book: is essential for a corporation (whether governed by a sole shareholder or multiple shareholders) for a proper due diligence exercise often required by financing institutions; is often required to perform an acquisition or a disposition; and is often required by taxation authorities in certain circumstances, just to name a few examples.
A meeting with your corporate lawyer to properly constitute your corporation and maintain its minute book throughout its existence is essential on many levels, and is particularly important for an ambitious company that wants to grow.
Emmanuel Kouzelis, Attorney-at-Law
Alepin Gauthier Avocats Inc.
This text contains legal information of a general nature and should not replace legal advice with a lawyer or notary who will take into account the particularities of your situation.