If you are operating as an incorporated body then you need to keep written records of certain decisions and actions. This is all governed by the Act that you are incorporated under such as the Canada Business Corporations Act or the Ontario Business Corporations Act (each Province or Territory has a local act).
Each corporation is required to have a Board of Directors (often it is a sole Director) and the decisions of the Director(s) and Shareholder(s) must be properly recorded by way of Minute (a written record of decision in a meeting) or Resolution (a written record of a unanimous decision made when a meeting is not held, signed by all the parties eligible to vote at a meeting had it been held).
It is important to follow the rules laid out in your Act, Articles of Incorporation, Bylaws and Shareholders’ Agreement (if you have one) when calling meetings and making decisions. Meetings must be properly advertised to all eligible voters, with minimum requirements for how much notice is required, and can not proceed if a quorum (the minimum number of people/votes that much be present to make a meeting valid) is not present. Some decisions at a meeting require a “simple” majority (more than 50% of votes cast) while other more significant decisions require a “super” majority (usually at lease 66.67% of votes cast) to pass a resolution.
Every corporation MUST have at least one meeting (usually called the Annual Meeting or Annual General Meeting, or a resolution in lieu of that meeting) of the Directors and Shareholders, even if there is only one person who is both Director and Shareholder.
While every corporation is different, here are some of the minutes/resolutions that are common for small closely-held corporations:
- periodically to approve large transactions, borrowing funds, issuing dividends or appointing/setting remuneration of the President or Chief Executive of the corporation
- annually (within six months of year end) to approve and sign the financial statements
- periodically to appoint or remove Directors or amend the Articles or Bylaws of the corporation
- annually (within six months of year end) to receive and consider the financial statements and dispense with the requirement for an auditor
It is important that these decisions be recorded properly and stored in your permanent Minute Book (a record of all the decisions of each body).
This article is intended for general education purposes only and is not legal advice. Please consult your lawyer for legal advice.