This is presented by Vanisha Sukdeo, Barrister & Solicitor and Course Director at Osgoode Hall Law School, which we discuss record-keeping techniques for your business; avoiding the pitfalls of keep legal records for your corporation.


Corporate Record Keeping 

Disclaimer: The transcripts may be different from the videos. Please use at your own risk.

Welcome to today’s talk which is entitled keeping corporate records which is part of the start of education accelerate your startup series run by the Canadian Angel Investment Foundation. Thank you for the invitation to speak with you today. 

I’ll give the standard disclaimer that this presentation and any corresponding documents do not constitute legal advice. Please consult with a lawyer if you need specific legal advice. 

So brief bio about myself my name is Vanisha Sukedo and I’m a lawyer, course director, and PhD candidate at Osgoode hall law school in Toronto Ontario.

I teach business associations at Osgoode as well as legal research and writing, and in the social science department at York, I teach corporate governance in business law as well as corporate social responsibility. I published two books with an academic publisher, the first was published in 2018 and the second in 2019, and I have a forthcoming book on business ethics and legal ethics with lexis nexis which is scheduled for publication in July of this year. That is my research agenda looking at corporate governance issues and how they relate to workers rights.

Turning to today’s talk on the topic of today’s talk; why should you ensure that you can maintain accurate and complete records in regards to running a corporation. There is a legal obligation to do so under the applicable legislation and if you incorporate a business under the federal legislation, the Canada Business Corporations Act, the obligations can be found at section twenty of the statute. If you incorporate under the Ontario business corporations association OBCA, then there are similar requirements. All provincial and territorial statutes near the provisions found in the canadian business corporations act, but not exactly so you have to make sure that you’re consulting the governing legislation.

Turning again further into today’s topic you can try to build a start up, you have this great idea, and you’re trying to figure out how can I incorporate this so I can run it as a corporation. Take a step back and think about, before you really get into the subject of corporate record keeping you should be aware of alternative business arrangements like sole-proprietorship and the partnership. 

These are the three most basic forms of business associations: 1) the sole proprietorship, 2) the partnership and 3) the most complex, the corporation. So you have to decide which is the best vehicle for doing business. 

The most basic business association is a sole proprietorship which means that the person who is running the business is also personally liable for debts and obligations of the business itself. This business form does not allow for shielding of personal liability. The advantage of choosing to run a business as a sole proprietorship includes the ease of doing so. You simply start carrying on business rather than the burdensome paperwork needed to run a corporation.

The next business form, the next advanced after sole proprietorship, is the partnership, where a group of individuals work together to run a business. You can enter into a partnership by accident. There is much case law on this topic or you can draft a partnership agreement which outlines the duties and responsibilities of the partners. Within the framework of a partnership there to most at standard forms: the general partnership and limited liability partnership. The limited liability partnership allows for some shielding of personal assets. There are exceptions to this so there is a general partnership and limited liability partnership. 

And then there is the corporate form. You cannot create a corporation by accident like how you can end up in a partnership by accident. The corporation as I already said is the most complex of the business forms. It follows and has the most rules and regulations that it actually has to comply with. The corporation allows for shielding of personal liability, has perpetual existence, and is a separate legal form from the shareholders, directors, officers, etc. So what is a corporation? A corporation as I said is a separate legal entity from its directors, officers and shareholders. The notion of the corporate veil dates back to the English case of Solomon and Solomon in the 1800s. The separation of ownership and management makes the corporation unique. As in the partnership, the partners government partnership. There is no distinction between ownership and management. But in the corporation, the true owners, the shareholders elected the board of directors to manage the corporation on their behalf and in their best interest, how to make the shareholders more wealthy. This is the model turned shareholder primacy model or shareholder wealth maximization. But this has been amended this obligation towards simply shareholders. This was amended in 2008 by the Supreme Court of Canada when they handed down the B. C. decision that year which expands directors duties under section 122 of the CBCA. This allows for directors and officers to consider interest beyond shareholders to include other stakeholders such as employees, consumers, the environment, and even the government itself. They are listed as a stakeholder group. 

The basic requirements for running a corporation are contained in the applicable legislation. In my business corporations course at Osgoode, I focus on the CBCA as the provincial and territorial statutes are similar. You would want to make sure you are aware of the specific obligations in your particular jurisdiction even though the statutes are relatively similar, you want to make sure you understand the precise wording that might differ from one jurisdiction to another.

What are the corporate record keeping requirements? You should consult with a lawyer and perhaps an accountant to know what your obligations are under the law regarding the CBCA but a large component of running a corporation involves financial record keeping as well. Once you prepare the articles of incorporation and you file the articles of incorporation, you have to ensure that you satisfy your ongoing requirements. Starting a corporation is a serious matter and involves care and diligence. There are government websites that are easy to follow about how to incorporate including what form or forms need to be completed and what are the necessary fees you have to pay. Incorporating is not difficult in and of itself. The maintenance of the corporation and its legal obligations is what actually is the difficult part; making sure that you satisfy all of your ongoing requirements.

You can visit the government of Canada website There contains an outline about maintaining corporate records saying that your corporation must keep certain records at the registered office or at some location in Canada as set out by the directors. On request the corporation shareholders and creditors can access the following records articles such as articles of amendments including amended articles of incorporation or restated articles of incorporation, bylaws and other amendments, any unanimous shareholder agreement, minutes of meetings and shareholder resolutions, notices that have been filed meaning form 2 which is the initial registered office address and first board of directors form 3, a change of registered office address form 6, changes regarding directors share register showing the names and addresses of all shareholders and details of the shares held, and securities registered showing the names and addresses of those who are or have been a security holder, the number of securities held by each security holder, and the date in particulars of the issue as well as the transfer of each security. Turning to section 20 of the CBCA. This outlines the obligations under the statute in regards to corporate records and it reads section 20 subsection 1. A corporation shall prepare and maintain at a registered office or any other place in canada designated by the directors, records containing A, the articles and the by laws and all amendments there too, and a copy of any unanimous shareholder agreement; subsection B, minutes of meetings and resolutions of shareholders; C, copies of all notices as required by section 106 or 113. And D, securities register that complies with section 50.

And then it goes on to directors records. Director’s records under the Canada Business Corporations Act subsection 2. In addition to the records described in subsection one, a corporation shall prepare and maintain adequate accounting records and records containing minutes of meetings and resolutions of the directors and any committees there up. So retention of accounting records subsection 2.1 subject to any other act of parliament in any act of the legislature all the province that provides for a longer retention period, a corporation shall retain the accounting records referred to in subsection two for a period of six years after the end of the financial year to which the records released. This is important to think about how long you have to actually maintain these records. for the purposes of paragraph 1B in subsection 2 where body corporations continued under this act include similar records required by law to be maintained by the body corporate before it was so continued. The place of directors records subsection four the records described in subsection two should be kept at the registered office of the corporation or at such other places as the directors think fit and shall at all reasonable times be open to inspection by the directors. 

Records in Canada

If the accounting records of the corporation are kept outside Canada accounting records adequate to enable the directors to ascertain the financial position of the corporation with reasonable accuracy on a quarterly basis shall be kept at the registered office of any other place in Canada designated by the directors.

In subsection 6, a corporation that without reasonable cause fails to comply with this section is guilty of an offense and liable on some reconviction to a fine not exceeding five thousand dollars. Be aware of what the consequences are for failure to maintain your corporate records.

A failure to be disciplined about maintaining corporate records can also result in audits by the Canada Revenue Agency. Think about not just your obligations under the corporate law statute, but your obligations in regard to your tax implications, your financial recordkeeping as well to make sure that you’re knowledgeable about all these different requirements you have to satisfy.

Turning to the minute book. The book is the official source of documents that shows the share ownership of the corporation. The minute book should reflect exactly who owns the corporation, when and to whom shares of stock have been transferred. The minute book shows the chain of decision makers of the corporation, basically who is responsible for certain events at certain moments in time. They should also include when people seize their function, when someone stops being a director, etc. A minute book leaves a  trail of decisions and transactions of the corporation and is important in case of an audit. 

If you regularly update your minute book you can determine effective dates for tax purposes as well if you’re ever contacted by the Canada Revenue Agency. Corporate records allow directors and officers the authority to act so updated records can help avoid challenges to the corporation’s authority when taking certain actions. The minute book details the official standing of the corporation and establishes a record needed to help corporate transactions. The minute book is the official recording of the compensation and dividends that the corporation has paid or distributed. This allows you to create a paper trail to demonstrate to the  Canada Revenue Agency or any governmental authority about the payments made by the corporation. Annual meetings of shareholders of a corporation are another source of corporate record keeping that should be given importance. Annual shareholder meetings are prescribed by law.

Shareholders meetings include approval of financial statements, election or appointment of directors, appointment of the corporation’s auditor,  annual returns. Some corporations are also required to file annual returns to maintain their status as a corporation. These typically include information such as the names and addresses of directors and the Canada business corporations act allows for a corporation to be dissolved if it fails to file annual returns only after years of failing to file but still that is something to think about today forced dissolution of the corporation. Ultimately corporate records are a reflection of the corporation itself having organized well maintained corporate records that show a well run corporation or can demonstrate such.

Maintaining accurate complete and current minute books in corporate records involves problems, cost aggravation and embarrassment. You don’t want to leave directors and officers of a corporation potentially vulnerable to be scrutinized by third parties, the  Canada Revenue Agency, or the court system. Complying with the laws as they apply to the corporate minute books will avoid problems like implications and legal penalties.

For example in Ontario if a corporation fails to comply with the requirements to keep up current and accurate corporate records, it is guilty of an offense and could be made to pay a fine of up to twenty five thousand dollars. Individual directors or officers may also be held liable up to two thousand dollars and in extreme circumstances could face imprisonment of not more than one year. The following documents are typically included in the company’s minute books. 

1) The articles of incorporation. when a company seeks to incorporate either federally or provincially, it must file its articles of incorporation with the government. The articles of incorporation outline things such as the company’s name, the registered address, the number of directors, the name and address of the company’s directors, what is the object or the purpose of the corporation, the number of shares, voting rights, restriction on transfer shares, etc. The articles of incorporation act as proof of the company’s business registration.

2) The second item that should be included is by laws. The corporate by laws are used by companies to organize their internal management. The bylaws set out obligations and rules pertaining to the company shareholders, officers, and directors. It is important for any corporation to verify that any business it purports to conduct is consistent with its bylaws otherwise the by laws must be amended before the corporation can proceed with such business.

3) Resolutions of directors and shareholders and minute meetings. Upon incorporation of the company, the company’s directors and shareholders must make key decisions pertaining to the initial organization of the company such as the company’s financial year ends, the company’s bank, who the author is, etc.

These key decisions are typically memorialized in resolutions. In order to pass such resolutions directors and shareholders normally hold annual meetings, however some companies choose to pass written resolutions in lieu of the meeting.

Directors and officers must also pass certain resolutions at the end of each financial year of the corporation. Annual resolutions generally deal with the adoption of financial statements, appointment of directors and auditors, as well as recording any other change in the company that may have taken place prior to the end of the company’s financial year. If the company conducts any special business between annual meetings, special resolutions must be passed by shareholders or directors to approve such special business.

4) Registers of directors, officers, and shareholders. A minute book is required to contain a register of directors, officers, and shareholders of the corporation. These registers maintain a log of all the directors, officers, and shareholders of the corporation since incorporation 

5) Shareholders ledger. A shareholders ledger is a document that identifies each shareholder in the company of the corporation and indicates how many shares such shareholder owns. The ledger also documents when the shareholder took ownership of the company shares and includes any information relating to any sales or transfers of such shares.

6) The forms filed. Copies of any documents or forms filed with governmental authorities such as corporate initial and annual filings, trademark applications, tax relief, etc. must be kept in the minute book 

7) Share certificates. A shared certificate is a certificate issued by the corporation to every shareholder certifying that such shareholder is a registered owner of shares in the company 

8) Shareholder agreements (if there are any). Shareholders agreement is a contract between all or some of the shareholders of the company that  structures the relationship between the shareholders. The agreement is a valuable resource for all companies because it provides a foundation for how the shareholders interact with one another as well as the upper management of the corporation itself.

I think I will end there. I am willing to answer any questions you have about today’s topic. Thank you.



Vanisha Sukdeo

Barrister & Solicitor, Course Director and Ph.D. Candidate at Osgoode Hall Law School

Vanisha Sukdeo is a lawyer, Course Director, and Ph.D. Candidate at Osgoode Hall Law School. Vanisha was Called to the Ontario Bar in 2007 after completing her articles with Ryder Wright Blair & Holmes LLP, and the Ontario Public Service Employees Union (OPSEU).  She received her LL.M. from Osgoode, LL.B. from Queen’s University, and her Bachelor of Arts from York University where she majored in Political Science. Vanisha taught at Osgoode Hall as a Course Director for five years before becoming an Adjunct Professor at Western Law. In 2012 Vanisha was a Nominee for the Ian Greene Award for Teaching Excellence, which is a University-wide teaching award. Vanisha has taught Business Associations and Legal Research & Writing at OPD as well as Selected Topics in International Business Law.

Her first book with Routledge is entitled Regulation and Inequality at Work: Isolation and Inequality Beyond the Regulation of Labour and focuses on how workers’ rights have evolved and can continue to evolve. Her second book Corporate Law, Codes of Conduct and Workers’ Rights was published in 2019 and explores how soft law mechanisms can be used in corporate governance. Vanisha recently submitted her manuscript with LexisNexis for the forthcoming book entitled Business Ethics and Legal Ethics: The Connections and Disconnections Between the Two Disciplines. She also has a book contract with UBC Press for a book that focuses on the BCE decision from 2008 and how it has changed corporate governance. Vanisha was the Guest Editor for a special issue of the Windsor Yearbook of Access to Justice. Vanisha has published journal articles and book chapters on a range of topics from corporate law to labour & employment law.

Twitter: @VanishaSukdeo

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