According to business dictionary, a minute book is ‘’ binder or bound book containing permanent and detailed record of the deliberations of, and resolutions adopted at, a firm's official meetings. All incorporated or registered firms are required by law to maintain an up-to-date minute book which should be accessible to all members of the firm at the firm's registered office or legal address’’ (BusinessDictionary 2018).
What contain Minute Book
A minute book is necessary for large corporations because it contains important corporation’s documents. According to J. Schwarz and E. Finnegan, a minute book often contains the following: ‘’The Articles of Incorporation; Bylaws, Initial Resolutions setting out officers elected, date incorporated, approval by laws, forms of share certificates, authorization re bills of sale etc, corporate seal, registered office, Consent to Act as Directors, Consent of Officers, Resolution of Shareholders electing Directors, Resolution of Directors electing Officers, Subscription for Shares, Resolution of Director re Allotment and issuance of Shares and relating Share Certificates, Resolution of Directors re Banking and Signing Officers with attached Bank account information, Resolution of Directors re Financial Year End, Resolution of Shareholders re appointment of Accountants and Exemption from Audit Provisions’’(J. Schwarz, E. Finnegan 2018).
Moreover, a minute book consists of records of the minutes of shareholders meetings, records of resolutions passed by shareholders as well as records of directors meetings. All of these are required by law, so it is necessary for the corporation to keep their minute book (J. Schwarz, E. Finnegan 2018).
Application of Minute Books in Enterprises
Enterprises need to keep their minute book up to date for various reasons. According to J. Kahane, they are:
- validity the corporations actions the company actions are valid when the corporation passes the proper resolutions. Validity is checked in the minute books,
- opening a bank account appropriate resolutions are required when the company needs to open a bank account. A minute book includes this type of documents;
- a minute book is required while receiving the loan from bank. If the corporation needs to obtain a loan, their lawyer gives the bank any necessary documents which are included in a minute book,
- minute books are kept when selling your company. Any corporation has a lawyer who before buying another company makes sure that the company possesses the minute book with all necessary documents. If the minute book is not completed, it causes delays in selling your company,
- Another reason, namely audits. While tax planning, a company needs to pay high taxes and many fines when their minute book does not contain proper resolutions. Shareholder dividends may be regarded as an income when record dividends are not proper,
- annual returns. They need to be filed with the provincial government. Annual returns inform about any changes to the corporation. A minute book needs to be organized because otherwise it may result in high fines;
- shareholder disputes and audits. In a situation when appropriate resolutions are not passed, minority shareholders are able to challenge decisions taken by corporation. It often leads to cost audit. Sometimes it ends up in court, and when a company does not keep a minute book properly, it results in disputes connected with shares, dividends, etc.,
- director protection. Directors need to issue a declaration in order to avoid possible conflicts. When a director wants to avoid responsibility, their dissent must be recorded. According to J. Khane, ‘’ If the corporate minute book and records are not organized and up to date, a director could be liable regardless if he dissent’’ (J. Kahane 2017).
Tradition versus modernity
In traditionally managed enterprises, there was only a paper version of the minute book. At present, as a result of available facilities, there is a possibility of keeping an electronic minute book. As B. Milliken pointed out, companies often maintain an electronic minute book. They are able to share important documents by a cloud – based service. Keeping a minute book up to date is not oppressive provided that a company is able to paper meetings properly (B. Milliken 2018).
- BusinessDictionary., (2018), Definition minute book “Webfinance”
- Kahane J., (2017), Top 10 Reasons Why Corporate Minute Books Must Be Maintained"Kahane Law Office Barissters & Solicitors"
- Milliken B., (2018), Why and How Do You Maintain a Corporate Minute Book? "ColleyGo"
- Schwarz J., Finnegan E., (2018), What is a Minute book and Why do I Need One? "Schwarz Law LLP"
Author: Joanna Piórkowska