Do Shareholders of a Corporation Own the Property of a Corporation?

An audit is a scary thing. The idea of government officials pouring over internal company records, micro-searching for financial incongruencies is enough to keep any business owner up at night. Fingers crossed it never happens to you. But sometimes it does…

According to the Canada Revenue Agency (CRA) website, during an audit, officers “closely examine books and records of small and medium-sized businesses to make sure they fulfill their obligations, apply tax laws correctly, and receive any amounts to which they are entitled.” An audit is a stressful process, often involving accountants, lawyers and frantic searches through old records. Ultimately, the goal of any audited party is to resolve the matter quickly and painlessly.

But quickly solving the problem requires corporate records to have been safely stored and updated accordingly. Naturally, the larger and busier a company, the easier it is to push these seemingly minute priorities down the list. Big mistake.

The CRA may ask to see the following records:

1. information available to the CRA (such as tax returns previously filed, credit bureau searches, or property database information);
2. your business records** (such as ledgers, journals, invoices, receipts, contracts, and bank statements);
3. your personal records (such as bank statements, mortgage documents, and credit card statements);
4. the personal or business records of other individuals or entities not being audited (for example, a spouse, family members, corporations, partnerships, or a trust); and
5. adjustments made by your bookkeeper or accountant to arrive at income for tax purposes.

Corporate record books, commonly referred to as “minute books,” contain pertinent information as it relates to the status and well-being of the company. More often than not, minute books are physical binders that sit idly on law firm shelves. The binders contain the articles of incorporation, amendments, by-laws, original copies of share certificates share certificates, corporate ledgers, and other nondescript records.

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The minute book should be updated as necessary, but at the very least once a year. What often happens, however, is that because minute books rarely need immediate updating, they are pervasively out of date.

Certain company resolutions can include the authorization to issue bonuses or dividends to employees or shareholders. For obvious reasons, this is of interest to the CRA. Dividends and income are taxed at different rates. So if an individual declares a dividend payment on their personal taxes, yet the resolution authorizing the corporate dividend payment is missing (because the minute book was not updated), the CRA may issue a tax reassessment.

The truth is that while law firms may charge a nominal amount to regularly update a company’s minute book, it costs thousands less than what a law firm will charge to overhaul and update a minute book in the case CRA audit. To avoid problems later on, here are a few important steps companies can take to alleviate the minute book concern before the Canada Revenue Agency comes calling:

• Make sure you know the location of your minute book. The vast majority of all corporate minute books are kept at the office of the company’s law firm. If it’s not there, try and locate it quickly.
• Ask your law firm whether the minute book is up to date. If necessary, remind them of recent transactions, issued dividends and other corporate matters.
• If possible, use a digital or virtual minute book. Minute books are kept in physical format for no other reason than that’s how they have been traditionally stored. A virtual minute book (whether a scanned version of a physical binder or a series of PDF documents stored on an external server) is equally as valid as the traditional physical minute book under Canadian law. Signatures need not be in pen and ink to be legally binding. New tools allow law firms to store and update minute books on the cloud, so clients can access their up-to-date records and share them instantly. Ensure your law firm uses these new solutions for your minute books.

The truth is that no one plans to be audited by the CRA. But that doesn’t mean you can’t be organized if and when the time comes. Taking a few small steps today with your minute book can bring a little sanity and clarity to an otherwise hectic ordeal.

Influencing change in law firms can be a challenging task, particularly when it comes to the adoption of new technology. In this blog post, we will explore the role of paraprofessionals and legal professionals in driving change and ensuring successful adoption of new technology. Key points include training, the “train the trainer” approach, and involving key stakeholders in the decision-making process.

• Training is key to successful adoption of new technology
• “Train the trainer” approach involves key people within the firm learning new technology and training others
• Involving key stakeholders, such as partners, in the decision-making process can ensure support for new technology

Influencing change in a law firm can be a challenging task, particularly when it comes to the adoption of new technology. However, the role of paraprofessionals and legal professionals in driving change and ensuring successful adoption of new technology is crucial.

One strategy for influencing change is training. As Karen Anderson, Corporate Services Manager at Blakes, Cassels & Graydon LLP, explains, “the process of getting there was democratic and it mainly involved paralegals from all of our offices because the firm had an understanding that these are the folks that are using this technology going forward.”

Watch the full interview, Influencing Change in Law Firms: The Role of Paraprofessionals and Legal Professionals

Another strategy is the “train the trainer” approach, where key people within the firm learn new technology and train others. Karen explains, “key people in our firm that are learning a lot of the stuff and then training other people within the group. And it really just keeps evolving, but the driver is the paralegal use it, and lawyers can enjoy read-only access to all of these records. As can the clients.”

It is also important to involve key stakeholders, such as partners in the decision-making process. As Karen Tuschak, former National Director at Dentons and now onwner at Spider Silk Solutions, explains, “One of the things that we did at Dentons was the paralegals were definitely the drivers of the new technology and what we wanted. But we did have a partner committee as well, just so there was support at that upper level.” By involving key stakeholders in the decision-making process, it ensures that they are aware of the benefits of new technology and can support its adoption.

Involving paraprofessionals in the process of change is also a great way of getting buy-in and support from the legal team, as they are the ones that will be using the technology on a daily basis. Furthermore, having them involved in the training and the decision making process, they can be the drivers of the new technology and they can provide insight and feedback to the vendor to improve the product and make it more useful for the legal team.

In conclusion, training, the “train the trainer” approach, and involving key stakeholders in the decision-making process are crucial for influencing change and ensuring successful adoption of new technology in law firms. By involving paraprofessionals in the process, legal teams can benefit from the adoption of new technology and can provide feedback to vendors to improve the product.

As the role of the paraprofessional continues to evolve, firms are recognizing the value that paraprofessionals bring to the table. Paraprofessionals are no longer seen as just support staff, but are becoming integral members of the team and are playing an increasingly important role in client relationship management. In this blog post, we will explore how the role of the paraprofessional is changing and how firms are supporting their teams in more client engagement.

In this post, we’ll look at:

• The role of the paraprofessional is changing and becoming more important
• Paraprofessionals are playing an increasing role in client relationship management
• Firms are recognizing the value that paraprofessionals bring to the table
• Firms are supporting their teams in more client engagement

Paraprofessionals are becoming the main point of contact for clients and are often the first point of contact for new mandates. They are also playing a crucial role in setting up fixed-fee mandates and cost-efficient solutions for clients. This shift in the role of paraprofessionals is changing the business model for firms and is becoming an important factor in the battle for talent.

Watch the full interview, Collaboration and Communication: Best Practices for Legal Technology Partnerships

Firms are supporting their teams in more client engagement by providing professional development programs specifically designed for paraprofessionals. This not only helps to attract and retain top talent but also helps to create a better work-life balance for employees. By providing stretch opportunities and development opportunities, firms can retain the valuable talent that they already have in the door.

In conclusion, the role of the paraprofessional is changing and becoming more important as firms recognize the value that they bring to the table. Firms are supporting their teams in more client engagement and are providing professional development programs specifically designed for paraprofessionals. By providing stretch opportunities and development opportunities, firms can retain the valuable talent that they already have in the door and attract top talent in the future.