Legal professionals are required to maintain diligent minute book records to remain compliant with federal and provincial laws across Canada. Minute books are how corporations remain accountable and transparent to their executives, their shareholders, and even different levels of government. Minute books summarize important details about a corporation, including:
Articles of incorporation
Constating corporate documents
Notices of consent
The process of maintaining minute book records is known as entity or subsidiary management. While these two functions are synonymous in many ways, there are distinct differences between the two approaches. How do they differ from each other? Let’s dive into that!
Minute book records allow corporations to remain compliant
Minute book records are required for corporations to remain in compliance with the laws stated by the Canada Business Corporations Act. All corporations are required to accurately report any changes to the corporation’s finances, operations, and shareholder agreements. This is primarily to ensure that the corporation operates fully above board and can provide accurate records of all financial transactions to the Canada Revenue Agency should an audit be required.
In addition to legal compliance, it makes good practical and business sense for corporations to maintain accurate minute book records. In the event that there are disputes about executive decisions or discrepancies between shareholder equity, up-to-date minute books allow the disagreements to be resolved accordingly. Ultimately, all corporations have responsibilities to their owners, to the government, and to any other stakeholders invested in the business.
The best way to think about minute books is to view them as a snapshot of a corporation’s value at a fixed period of time. Minute books allow corporations to maintain accurate records of past decisions, so that the focus of future executive or shareholder meetings remains on how to scale future growth for the corporation.
How your corporation documents minute book records
The process to create and manage minute book records depends on one key variable. Are you a legal professional hired by a corporation to manage their legal affairs, or are you part of an in-house corporate counsel that oversees all compliance matters? Depending on your role, you’ll undertake either an entity management or subsidiary management process to maintain accurate and transparent minute book documents.
What is entity management?
Entity management refers to the process of managing legal entities like corporations, trusts, partnerships, and other legal entities. The purpose of entity management is to ensure legal entities, such as corporations, live up to the various responsibilities and obligations to the various stakeholders invested in those entities.
The entity management process is chiefly undertaken by legal professionals who are either independent professionals or members of a law firm. In either case, these legal minds have been hired by a corporation to manage their minute books and corporate documents to remain compliant with Canadian jurisdictions.
What is subsidiary management?
Subsidiary management is a subset of entity management, which involves the corporate governance management of a corporation and their related subsidiary entities. Similar to the broader entity management process, the purpose of subsidiary management is to ensure all responsibilities and obligations are upheld by the corporate entity.
The distinction that separates subsidiary management from the broader entity management lies in who is responsible for the recordkeeping. Subsidiary managers are in-house corporate counsel who manage the same directors and share capital across many entities. This could involve as many as tens to hundreds of related parties.
How to use entity or subsidiary management software to manage minute book records
Whether you’re part of a law firm or part of an in-house corporate counsel, minute book management is an essential part of your role to support the corporation. Having the right tools to make this process seamless enables your own legal team to manage time and resources in a prudent and efficient manner.
That’s why entity/subsidiary management software is such a valuable asset to legal professionals. These solutions modernize the entire minute book record keeping process. You can eliminate physical binders of minute book records from your day to day routine by transferring all minute book files into digitized records that live securely within the cloud.
Cloud-based solutions are backed by biometric and hardware key authentication parameters, ensuring only people with approved credentials can access the files in the platform. If there are disputes between shareholders, the matter can be resolved in a matter of minutes by using advanced search capabilities to immediately pull up the file in question.
Entity/subsidiary management makes great business sense for legal professionals. These platforms make legal representatives more efficient, which helps reduce administrative costs. Additionally, clients are far more satisfied with your legal services, since you can provide answers to their pressing questions instantaneously. Finally, you can even give your legal team a leg up when attracting new talent by positioning your entity as an innovative leader in entity/subsidiary management!