My corporation's minute book is out of date in Ontario — does it matter?
An incomplete minute book delays financings and sales, can defeat the lifetime capital gains exemption on a share sale, and leaves directors exposed on resolutions that were never documented.
Ontario and federal corporations must maintain records of directors, officers, shareholders, share issuances and transfers, annual resolutions and, for Ontario corporations, a register of ownership interests in land. Individuals with significant control must also be tracked.
The consequences show up at a transaction. On a share sale the buyer's counsel conducts due diligence, and unresolved gaps — missing share certificates, undocumented dividends, resolutions never signed — reduce price, delay closing or defeat the capital gains exemption.
Most gaps can be rectified through a clean-up: reconstructing the share ledger, passing confirming resolutions, and filing outstanding annual returns. Doing it before a deal is far cheaper than doing it during one.
Source: Business Corporations Act, R.S.O. 1990, c. B.16
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