Maintaining Corporate Records in the 21st Century
MAINTAINING CORPORATE RECORDS IN THE 21ST CENTURY
Or how I learned to love digital.
Authors: Sandy Mollard and Tom Frohlinger
A wise judge once said that a Corporation is an inanimate object existing only “in the contemplation of the law”. In other words, you can see a person, but you cannot see a Corporation. What you can see, as the physical manifestation of a Corporation is the Corporate Minute Book.
A Corporate Minute Book is simply a binder that contains the legal documents that evidence the life of that company. Without a doubt minute books are, in a word, a “boring” read.
Just because they are boring that does not make them any less important in the existence of a Corporation. This is especially so when the CRA comes calling because they are doing an audit, or when the Company is being re-organized for risk avoidance or tax reasons, or when new or existing parties are making further investments in the Company or when a major transaction is being contemplated relating to the Corporate shares or assets. An up to date and accurate minute book can avoid a great deal of aggravation, unnecessary delay and professional fees as the corporation responds to these needs.
In our Corporate practice we often find that paper-based Minute Books kept by our clients and in some instances by their counsel or accountants are not in the substantive order that CRA, lawyers for financial institutions and others requiring information on the history of the Corporation want or need.
The problem with paper-based, physical minute books are:
- Over the years many binders of paper will accumulate;
- As companies grow and move some of these accumulated records may possibly be lost or destroyed;
- The Corporate Minute Books take up space in your office or in your professional advisor’s offices, have to be stored and retrieved all of which costs money;
- If you need to have your Minute Books reviewed, it will require either the interested party attending at your place of business or your professional advisor’s office or will involve delivering the physical minute books to that party. That has its attendant cost, inconvenience and the real possibility of loss of documents or loss of privacy in transit;
- In order to assemble the Corporate Minute Book, documents need to be originally signed by shareholder’s, director’s and officer’s, sometimes by one or more of them in combination. This introduces delay, possible loss of document or simply lack of attention to detail, leaving the documents unsigned and the minute book incomplete.
We have all experienced the change that technology may bring in our lives. Technological changes have now come to effect Corporate Minute Books. While digitizing minute books will not make it better reading, it will make the corporate information and documents more readily available to those that need to have access. In our view, this is a “good thing”.
A digital compendium of the corporate record is both convenient and permanent. The advantages of the digital records of a company minute book are easily seen by contrast:
- The corporate existence can be accessed remotely (if access is granted) by those needing to review (like your auditors, accountants or bankers);
- It provides a secure document delivery instead of relying on risky emails which aren’t secure;
- The Minute Book records can be maintained on your or your lawyers secure servers or other electronic document storage capability of your choice (possibly all three for additional security);
- You have access to any document right at your fingertips so no more wasted time trying to locate the physical copy and find the right document;
- The cost of paper, storage, transfer and the attendant risk and cost is eliminated;
- Electronic Minute Books kept in the appropriate format will allow for electronic signatures. This is not only time saving but will expedite signatures on multi-party documents to ensure the timely completeness of the corporate record;
- properly maintained electronic Minute Books allows for any part of the Minute Book to be kept confidential from access to any party other than the Corporation. This is a great advantage because in a physical audit of paper-based Minute Books, the confidential documents have to be manually removed from the Minute Book. This creates potential concerns when having the documents re-inserted in the Minute Books and the possible loss or mixing up of these documents at the time in so doing: and
- Damaged, lost, or stolen Minute Books can be recovered virtually, instantly and without administrative effort
PKF has the facility to provide our clients, their accountants and other professional advisors with the ability to access the Corporation’s Minute Book maintained by PKF Lawyers. We believe this is not only in keeping with the technological evolution of corporate law in the world of commerce but also with your and your advisors’ needs for efficiency. We have made a substantial investment in this technology because we are of the view that it is the future and is a needed, and valuable service to you and your financial and professional advisors
In earlier direct communications with our clients, we have suggested the possibility of converting to a digital Minute Book format and in that regard, Sandy Mollard PKF’s Senior Paralegal has been providing this service for over a year. We would be pleased to discuss with you a switch of your paper based Corporate records to a digital Minute Book format. We can even show you how this will work for your corporation.
If we can be of assistance, please do not hesitate to contact Sandy Mollard at (204) 956 – 0490 or email at firstname.lastname@example.org for more assistance.