Introduction

The minute book is the legal record of a corporation's existence — it contains the articles of incorporation, shareholder register, director register, and the resolutions that authorise every significant corporate action. For most incorporated professionals, it is a binder that was handed over by the lawyer at incorporation and has not been updated since.

The four errors below are not abstract compliance concerns — they affect the validity of corporate actions, the CRA's ability to confirm income characterisation, and the legitimacy of transactions that are challenged on audit.

Mistake 1: No Dividend Resolutions

A corporation that declares and pays dividends — non-eligible or eligible — must have a board resolution authorising each dividend declaration. The resolution identifies the amount per share, the class of shares on which the dividend is declared, and the record date.

Many incorporated professionals pay themselves dividends informally — a transfer from the corporate account to personal account, recorded as a dividend in the books — without ever passing a formal board resolution.

In a CRA audit where the auditor reviews the shareholder loan account and the compensation structure, the absence of dividend resolutions undermines the characterisation of the payments as dividends. The payments may be recharacterised as shareholder benefits or undeclared salary — with different tax consequences.

Mistake 2: No Director and Shareholder Register Updates

The minute book contains registers of current directors and shareholders. When a shareholder change occurs — shares transferred to a spouse, a new partner added, shares redeemed — the register must be updated.

A minute book that lists the original sole shareholder but does not reflect shares issued to a spouse five years ago has an inaccurate shareholder register. In a transaction — a business sale, a financing, a new partner admission — the lawyer doing due diligence will identify the discrepancy, creating a delay and a correction requirement at the worst possible time.

Mistake 3: Never Updating the Registered Address

The corporation's registered office address must be current with the Ontario Business Corporations Act registry. CRA correspondence and legal documents sent to an outdated registered office are not received. Missed CRA notices — because the corporation moved and the registered address was not updated — do not give the corporation additional time to respond.

Mistake 4: No Annual Meeting Documentation

The OBCA requires that an annual general meeting of shareholders be held, or that shareholders sign a written resolution in lieu of a meeting. Many corporations satisfy this requirement with a written resolution — but many others have not passed any annual meeting documentation in years.

This gap does not typically affect day-to-day operations, but it creates a compliance history problem that surfaces in due diligence for a business sale or financing, and may affect the corporation's ability to issue valid share certificates or pass subsequent resolutions.

The Practical Fix

An annual minute book update — a service Rotaru CPA coordinates with the corporation's lawyer — ensures dividend resolutions are in place, registers are current, and the annual meeting requirement is satisfied. The cost is modest; the compliance value is significant.

When to Speak With a CPA

Any corporation that has not had a minute book review in the past two years should schedule one. For corporations that are approaching a business sale, a financing, or a shareholder change, the minute book must be current before the transaction proceeds.

Rotaru CPA coordinates annual corporate minute book maintenance for all incorporated clients. Book a consultation to schedule a minute book review.