Six Most Common Problems in Maintaining Corporate Minute Books

There are tens of thousands of small corporations in Alberta. Many of them are private corporations with fifteen or fewer shareholders. Many small corporations use an individual shareholder's or director's home address as the address for service and maintain their own minute books and corporate records.

The maintenance of many of these corporations' minute books is, however, often less than stellar. Here are some of the most common problems in the maintenance of corporate minute books and corporate records, and the obvious solution:

  1. The primary problem most corporations face is the non-filing of annual returns. These filings often get overlooked by individuals maintaining their own minute books, or get put off to a later date. The danger with this approach is that one year past the date when the annual return is due in Alberta, the corporation slips into delinquent status and Corporate Registry takes steps to begin dissolution. When the corporation is "struck", it is struck from the Register at Corporate Registry. In other words, it is no longer able to carry on business. The corporation may be revived, but while struck the shareholders may not enjoy the rights and protections that usually prompt incorporation in the first place. It is far better to keep your corporation's status current. If a corporation is registered to carry on business in other provinces, the corporation must also file annual returns in those other provinces on a timely basis.
  2. Many corporations do not pass annual resolutions of directors and shareholders, which in the majority of private corporations are used in lieu of meetings of shareholders and directors. Either a resolution or meeting of shareholders is required by the Alberta Business Corporations Act.
  3. Minute Books are generally not maintained in an orderly fashion when individuals maintain their own minute books. Often annual returns and resolutions or other corporate minutes are not placed in the minute book and share certificates are lost. All of these problems are curable but better to avoid in the first place. Incomplete records may cause significant timing or other problems should your corporation wish to embark on a significant transaction.
  4. Certain transactions, the most obvious example being the transfer of shares, are not properly implemented because of lack of knowledge on behalf of the individual maintaining the minute book. Usually parties in this situation do not realize that directors' resolutions authorizing the transfer of shares or further resolutions authorizing other transactions are required. The resolutions may not be passed or if passed, may not be properly completed. This could be the cause of significant corporate or tax problems.
  5. Notices that must be filed with Corporate Registry are often overlooked, such as a change of Corporate address. Notices of changes in directors are required to be filed within a specified time. Significant problems and possible liability could result. The documents filed with Corporate Registry are the records available to the public.
  6. Another major problem for corporations maintaining their own records is what happens to legal documents served on the Corporation. Often these documents get put aside, lost or are held until the person responsible comes back from vacation. Often the limitation period for filing a defence has expired and the corporation is noted in default. Often the people receiving the served documents do not understand that the corporation is being sued and that serious consequences could result from not responding.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.