Insights and updates
from MinuteBox

One of the steps in the articles of incorporation for a new company is the transfer and issuance of new shares to shareholders. The issuance of shares to shareholders documents the various owners and investors in the company, alongside the percentage of the business they can claim ownership towards. This can also be done using cap tables, which track the capitalization of the company and who owns what percentage of shares.

Documenting the transfer of shares establishes a new regime for the transfer of public securities among the listed shareholders. It’s intended to eliminate much of the expense and delay prevalent in the securities industry by establishing a central depository for all corporate securities. New rules establishing how to redeem outstanding shares can also be documented.

Since this is a vital step in the incorporation process, it’s necessary that all corporations create their own shareholder ledgers to document this information. Traditionally, it has been a time consuming and tedious process. Therefore, is there any way to more efficiently track transfers of corporate shares among shareholders?

How to create your shareholder ledger

A shareholder ledger is the best resource to keep track of all issued shares to a corporation’s various shareholders. It allows for a smooth and accurate tracking of all shares issued by the corporation to each individual shareholder, and it’s also used to monitor the transfer of shares from shareholders back to the corporation.

We’ve created a helpful guide on how to create the perfect shareholder ledger to help you create the outline of one for your own corporation. This will give you an idea of what to include in your shareholder ledger so that you correctly follow all of the requirements to incorporate your business within Canada.

5 ways to efficiently track transfers of corporate shares

Once you have your shareholder ledger firmly established, you can keep track of all share exchange transactions in a diligent manner. But what are the various ways you can go about doing this work? Here are the five most common methods with some proving to be more efficient than others. Have a review and decide what’s best for you.

Paper records and written documentation

In the old days, the only way to keep track of shareholder transactions was through a registry notebook. Companies keep their shareholder registry locked in the corporate office space to ensure it remains safe and securely under lock and key. Each time that shares are issued or transferred among shareholders, a new record is added into the registry.

The good thing about this approach is it’s very traditional, and every party involved will know exactly how to read records in the shareholder ledger. The bad news is that because it’s such an antiquated system, it’s very time consuming and tedious for legal professionals to do. Too much time is lost to administrative work that can otherwise be spent on billable hours with new or existing clients.

One office computer as master of all records

If you’ve moved on from paper shareholder ledgers, that’s likely a step in the right direction. Some companies have only begun the initial stage of this journey by transitioning to digital recordkeeping on one secure office computer. In this scenario, records are maintained in an Excel spreadsheet to track the transfer and issuance of any new shares.

The good thing about this approach is that it is more secure than paper transactions, and there’s significantly less risk that documentation will be lost or misplaced. The bad thing is that it limits accessibility to the shareholder ledger. Only people who log onto that specific office computer can view the records in a convenient manner.

Spreadsheets shared with all shareholders

The next step beyond keeping files on one office computer is to pass them around with all shareholders. Spreadsheets built within Excel can be sent to all relevant parties. This way, all shareholders can view the current capitalization of the company whenever they choose.

The good thing about this approach is that it’s far more transparent as all relevant parties can receive copies of the master file and plainly see the numbers for themselves. The bad thing about this approach is that it doesn’t allow new or updated records to be viewed as conveniently. A new transaction may occur before an updated spreadsheet is passed on, leaving shareholders unaware of the exact state of the company’s capitalization.

Send all information via email

In some cases, companies may do away with a spreadsheet altogether. Any issuance or transfer of corporate shares is communicated via email in one message that highlights the most recent shareholder transaction(s).

The good thing about this approach is that information can be delivered to all shareholders, and they can store the messages in their inboxes or in one manually created file for their own records. The bad thing is that this is a very non-secure approach. Emails can be lost, forwarded, or even corrupted on the web, potentially exposing private shareholder information to the public.

Entity management software

Modern entity management software simplifies the entire process of issuing and tracking shares among all shareholders. You can use the technology to easily report share exchanges in a secure database, document all relevant information about the shareholders in notable fields, and record the value of all corporate ledgers in secure cloud-based registers.

See It in Action

See feature

The best part is that all shareholders can have access to the digital ledger, ensuring everyone is up to speed on the latest issuance or transfer of shares. This allows decisions by the board to be made in more efficient and prudent manners. You can learn more about how to track shareholder transactions with entity management software here.

White collar crime is a very costly affair in Canada. According to Criminal Intelligence Service Canada, which shares and coordinates criminal intelligence shared between different police agencies, white collar crime costs the country up to $5 billion per year.

Naturally, governments across the country are eager to crack down on these crimes. One of the ways this was done was an amendment to the Canada Business Corporations Act in 2019. The amendments mandate that corporations must provide greater transparency over shareholder equity in their businesses, as well as assist authorities to prosecute financial crimes.

The federal law was adopted by several provinces over the past three years, including British Columbia, Manitoba, and Nova Scotia. As of January 1, 2023, Ontario, the largest province in Canada, will enact its own version of the law.

What the OBCA amendment means for business

The OBCA is the Ontario Business Corporations Act, which has a similar mandate to the CBCA at the federal level. The Ontario government updated the OBCA with rules that enforce similar priorities for corporations to follow as the federal law.

Under the new OBCA legislation, corporations headquartered in Ontario must create and maintain an ISC register with updates reported on an annual basis. An ISC register is a document that lists all of the individuals with significant control (ISC), ensuring all key stakeholders comply with the law. The purpose of the OBCA, and its federal counterpart, is to support a Canada-wide effort to crackdown on white collar crime, particularly tax evasion.

Other provinces have enacted similar legislation of their own, following the lead of the federal example. Quebec has created its own legislation in Bill 78 that’s similar to the CBCA laws, though it has slightly different guidelines for corporations to follow. You can learn more about Quebec’s Bill 78 here.

Who fits the profile of an ISC?

Who exactly is an individual with significant control in a corporate entity? In most situations, an ISC is a registered shareholder with shareholder rights who controls at least 25 percent of the voting rights attached to all outstanding corporate shares. The language in the law also applies the ISC label to any shareholder whose influence, if exercised, could in fact control the decisions made by the corporation.

There are some exemptions to how the ISC classification is applied. For example, if a shareholder is an investor for a purely commercial relationship, reflected in the form of a franchise, license, lease, or some other managerial agreement, their involvement in the corporation’s affairs is considered an “arm’s-length” affiliation. For that reason, that investor would not classify as an ISC.

What needs to be included in an ISC register

Under the OBCA laws, an ISC register must be maintained and updated by a corporation as part of its annual financial statements. However, what exactly needs to be included in an ISC register to comply with the law?

Most of the information in an ISC register is identical to information that most corporations maintain in a standard shareholder ledger. This includes personal information such as names, addresses, dates of birth, and jurisdictions.

There’s one key difference between an ISC register and a standard shareholder register. The difference is that corporations must include the date on which an ISC became an ISC shareholder, and a description of how that individual meets the criteria of an individual with significant control in the corporation.

How to use entity management software to file ISC registers

If your corporation is based in Ontario, you’ll need to create an ISC register to comply with the law. Now, you may be an established corporation with a detailed shareholder ledger, which you can modify with little hassle. But what if you’re a new corporate entity? How do you create a new shareholder ledger without sacrificing laborious hours of your paralegals’ time and energy?

The best approach is to use entity management software to streamline your corporate recordkeeping process. Platforms like MinuteBox have a built-in shareholder register template in our Entity Information Summary that you can use to build out your register, and you can include any required details to highlight investors that fit the ISC profile.

Under the Entity Information Summary is a subsection called the Capital Section. Here, you can input all authorized information about shareholders and corporate transactions in the available open fields.

You might be asking the question: how is this going to save your legal team precious time and manpower? MinuteBox utilizes document automation technology that requires no coding or coding experience to work the platform. It allows your team to work faster but still meet all of the legal criteria necessary to remain in full compliance with both federal and provincial laws. Simply open up the platform and the work can be complete within minutes!

Are you part of an Ontario-based corporation and in need of an efficient solution to complete your transparency register? Join the MinuteBox revolution so that you can comply with updated corporate governance in a fast and efficient manner while maintaining your commitment to accountability and transparency.

Corporate governance and accountability standards often vary by region. In fact, different jurisdictions within a country can pass their own laws and regulations regarding transparency registers, regardless of what other jurisdictions choose to do.

However, some jurisdictions will follow others that took the lead first upon seeing how things work. For example, in Canada, transparency registers have legally been binding for privately incorporated companies in British Columbia. Now, other provincial jurisdictions, including Quebec, will enact the same laws for corporations headquartered in their provinces.

Quebec Bill 78: what it means for corporate transparency

In British Columbia, the laws require all information about a corporation’s significant executives to be reported on in a transparency register. The general public does not have access to this information, which is stored in the company’s own corporate records database. Aside from key executives within the corporation, law enforcement agents and inspecting officials are the only outside parties that will have access to the information contained within the register.

Similar legislation will soon become law in Quebec. One of the catalysts that inspired Quebec’s Bill 78 is an international effort to prevent corporations and their executives from engaging in tax fraud, money laundering, and the financing of global terrorist activity. The Quebec bill amends the existing legal publicity of enterprises (LPA) by adding new requirements under the Quebec Enterprise Register (REQ).

Now, all corporate registrants operating in Quebec must provide transparent records of the people, partnerships, trusts, and all other corporate entities that conduct business in the province. Non-profit organizations, Crown corporations, and certain financial institutions are exempt from the laws under Bill 78.

What information goes into a transparency register?

Corporations are often large entities, requiring lots of information to be recorded within a transparency register. But not every individual working for the corporation needs to be included within the recordkeeping process.

According to the laws, only “significant individuals” are required to be transparently registered. A significant individual is defined as anyone who:

1. Owns an interest or right to the company in the amount of 25 percent or more of all corporate shares
2. Can elect, appoint, or remove corporate directors from their executive positions

Under Bill 78, these significant individuals must disclose personal information within a transparency register to legally represent their affiliated corporations within Quebec. Information that must be registered includes things like:

• Legal names
• Dates of birth
• Contact information
• Citizenships
• Residencies

Collecting, documenting, and filing all of this information is a time consuming affair for your paralegal professionals. Additionally, should any records need to be amended or updated, it will take a lot of time for your team to modify these records, especially if they’re maintained in hard paper files. This is time that can otherwise be spent more efficiently with the right resources.

How to use entity management technology to manage transparency registers

If your corporation is based in Quebec, you’ll need to enact your own transparency register to comply with the new laws. How do you do so without sacrificing laborious hours of your paralegals’ time and energy?

The answer is to introduce entity management software into your corporate recordkeeping process. Platforms like MinuteBox automatically generate transparency registers through our Entity Information Summary that’s built directly into the platform.

Under the Entity Information Summary is a subsection called the Capital Section. It’s here that all authorized information about shareholders and corporate transactions is documented with a few insertions of data into open fields. Among those fields are areas to insert information for the company’s transparency register, ensuring your corporation is legally compliant with Quebec’s new laws surrounding corporate transparency.

The best part of this solution is that it utilizes document automation technology to streamline how firms insert bodies of text or other data into their corporate records. It’s a much faster and more efficient way to update information legally required for a transparency register or any other corporate record. Plus, these are code-free platforms, which means you don’t require tech gurus and experienced developers to manage your records. Simply open up the platform and the work can be complete within minutes!

Are you part of a Quebec-based corporation and in need of an efficient solution to complete your transparency register? Join the MinuteBox revolution so that you can comply with updated corporate governance in a fast and efficient manner while maintaining your commitment to accountability and transparency.

There are many steps a company must complete when registering as a corporation. These steps can be as straightforward as filing the official corporate name, office, and records. However, the steps can also be more complicated, such as authorizing share structures that will distribute shares and ownership of the corporation.

Under Canadian law, the Articles of Incorporation dictate that companies must define the share classes and the maximum number of shares that the corporation is authorized to issue. This is a necessary step in the incorporation process as these share classes outline the rights that will be held by each shareholder.

How are shares divided amongst shareholders?

As dictated under the Articles of Corporation, shareholders are classified into different classes. In some cases, a corporation may issue only one class of shares, in which each shareholder is entitled to the same rights as all of the others. These rights include, but are not limited to:

• The right to cast votes at meetings of all shareholders
• Entitlements to any dividends declared by the corporation
• Ownership of any remaining property previously owned by the corporation should the company enter a state of dissolution

The rights that each shareholder is entitled to depend on the class of shares they receive as mandated by the Articles of Incorporation. Here is a quick breakdown of the classes of shares that can be issued to various shareholders.

Common shares

Common shares are also known by the name “equity shares,” and they are the most likely class issued by a corporation delegating only one type of share to shareholders. All holders of common shares are entitled to the standard rights outlined by the Articles of Incorporation.

Special shares

Special shares are in a different category from common shares. As a result, recipients of special shares have rights, privileges, restrictions, and conditions exclusive to them and separate from the standard rights issued to common shareholders. Special shares are typically issued by corporations for tax purposes, and they can be redeemed or retracted at the discretion of the corporation.

Preferred shares

Preferred shareholders, as the name implies, have preferential rights that have higher priority over the other classes of shareholders. This means that preferred shareholders are the first recipients of dividend payments, or they receive the first right of refusal for ownership of remaining land or other assets if the corporation dissolves.

What other shareholder rights are issued with shares?

The Articles of Incorporation don’t just dignify the standard rights for shareholders. They also outline the rights or intentions of shareholders and their financial considerations.

Some of the most common provisions attached to shares that the corporation can enforce include the following:

• Rights to redeem the shares by shareholders in what’s legally known as a retraction. A retraction entitles shareholders to force corporations, under specific circumstances, to redeem some or all of the shares held by those shareholders.
• Restrictions on the issuance of new shares to outside parties. These restrictions entitle existing shareholders to claim first right to refusal of new shares, distributed proportionally among the board of directors before offering them to new investors.
• Conversion or exchange rights, which entitle shareholders to require corporations convert their shares into another class of shares. For example, the right to convert common shares into preferred shares.
• Liquidation rights to shareholders, thereby entitling shareholders to returns on remaining capital upon the dissolution of the corporation.

How to use technology to track and report upon all shareholder activity

Obviously, there’s a lot of data involved with share transactions between the corporation and the various shareholders. Maintaining accurate, up-to-date records of these transactions requires a lot of clerical work for your legal professionals, which can take an abundance of time and resources away from client-facing revenue-driven services.

But it doesn’t have to go that way. You can automate shareholder transaction reports using entity management software to simplify the process. Entity management platforms provide built-in shareholder ledger templates that can be populated with all shareholder transaction records. It’s a simple matter of selecting pre-built data management fields and inputting the information about existing shareholders, share classes, and any minute book meeting minutes documenting authorized exchanges of shares among all relevant parties.

There are two reasons why this is the ideal approach to managing all shareholder information. First, since it’s all digital, there’s no risk that paper documents will be lost or misplaced. Everything is safely and securely stored within one convenient platform, which all shareholders can access and review at their own convenience.

Second of all, there’s no coding or development experience required by legal professionals to use the platforms. The templates are pre-built into the platform, and you can add or remove data fields using straightforward drag and drop features. This simplifies the entire recordkeeping process and enables you to maintain an accurate report on share activity with no hassle at all.

Are you ready to automate shareholder transaction reports? Join the MinuteBox revolution and maintain all shareholder transaction records with speed and efficiency.

Some corporations have heard of cloud-based entity management software, and many others have not. However, even those corporate executives who have heard about the technology don’t necessarily know how it works or the benefits that it delivers to their businesses.

The purpose of this post is to provide a helpful breakdown of cloud-based entity management software as a viable solution to improve minute book management. We’ll also describe how the technology functions, and we’ll lay out the net benefits that help your legal team provide more effective service to new and existing clients.

What is cloud-based entity management software?

Cloud-based entity management software is trusted by legal professionals to centralize, consolidate, and organize minute book records and corporate documents into one digital platform. It enables both law firms and corporate counsel to perform secure, efficient, and diligent minute book record keeping using a process that saves an abundance of time and resources on compliance tasks.

Why is cloud-based entity management software important?

There are a number of practical business reasons why legal professionals should integrate cloud-based entity management software into their operating practices. Here is a quick overview of some of the biggest incentives to digitize corporate minute book records.

Flexible remote access to minute book records for clients

Business owners and executives increasingly conduct business outside the boundaries of corporate offices. This modern workflow was accelerated by the COVID-19 pandemic, and many companies have adapted to the new working order. In fact, a PWC survey of 120 business executives conducted during the pandemic found that 73 percent of those executives believed remote work was both successful and beneficial.

Since cloud-based entity management software stores important minute book records and shareholder data in the cloud, executives can freely access records from the convenience of any location. Rather than wait for pre-arranged meetings to review records or arrange for signature approvals, legal professionals can complete the entire review process in the cloud with speed and proficiency.

Support for client retention needs and strategies

Client satisfaction is an important KPI for legal professionals. After all, clients that are happy and satisfied with the work of their legal representatives are far more likely to retain those services for future needs.

According to the 2021 LexisNexis InterAction Marketing & Business Development Survey, there were a number of common client retention challenges faced by law firms all over the world. Some of the biggest challenges restricting higher client retention rates include:

• A lack of communication with clients, which was cited by 22.8 percent of respondents
• Data quality challenges, which were suggested by 18.7 percent of respondents
• Insufficient legal resources, as stated by 15.2 percent of respondents
• Legacy systems that are not efficient enough, according to 13.5 percent of respondents

Using cloud-based entity management software, each of these challenges can be effectively addressed and overcome. Clients can access the platform at their own convenience, ensuring they remain fully up to date regarding the status of important records. The data is sorted and organized, while advanced search filters make it easy to find specific information instantly. The platform enables decisions to be made faster and easier while using fewer legal resources. Finally, cloud-based entity management software is built with the specific purpose of making existing legal workflows more productive and efficient.

In the end, cloud-based entity management software is a valuable resource to boost client satisfaction rates, which should help improve client retention rates.

Competitive marketing and positioning advantage for your firm

Another highlight of the LexisNexis survey was that nearly 80 percent of law firm leaders said that marketing is essential to drive strategic outcomes for their businesses. Most firms intended to increase their marketing budgets by an average of 15 percent to address these needs.

One way for law firms to enhance their marketing campaigns is to position themselves as innovative leaders. Cloud-based entity management software is an innovative solution that modernizes the entire legal compliance process. Firms can accurately promote their workflows as a modern innovative way to complete entity management tasks.

Many corporations embrace innovative solutions, and they want to utilize the services of other businesses that share those same outlooks. Additionally, your firm can market itself as an innovator to attract top quality legal talent, capitalizing on how legal professionals wish to engage with clients by relying more on modern technology. Attracting the highest professional talent to join your firm expands the legal roster to better support future client needs.

How cloud-based entity management software works

Cloud-based entity management software enables your legal department to transform physical corporate records and minute book binders into sophisticated digital documents. The software includes built-in enterprise grade scanners, which you can feed with entire binders of minute book records to upload those files directly into the platform. The scanning process is conducted on-site at your corporate office, so there is no risk of any pages being lost, damaged, or corrupted during the transition.

Once uploaded onto the platform, you can organize all records into detailed documents that resemble digitized PDFs. Searching and bookmarking important files makes information retrieval easy and convenient for your legal team, ensuring clients gain instant answers to pressing questions about important minute book records.

If you’re worried about the security of your client’s corporate records, there’s no need to stress out about those concerns. Cloud-based entity management software like MinuteBox includes biometric and hardware key authentication features, providing a multi-step sequence for all representatives – lawyers and clients alike – to follow, so they can access the records in the cloud. Permissions to access the account can be managed at an administrative level, guaranteeing that all client records remain fully secure.

Net benefits of cloud-based entity management software

Finally, what are the key benefits that come from using cloud-based entity management software? Many of these benefits we’ve touched on throughout this post, but we’ll give a brief synopsis of how this technology ultimately helps your legal team achieve important KPIs.

The biggest advantage for firms that utilize cloud-based entity management software is measured in time efficiency. Given that the average lawyer only bills clients for 2.5 hours out of an 8 hour workday, solutions to accelerate minute book compliance tasks allow legal professionals to earn back valuable time that can be used to increase billable hours.

Law firms are always on the hunt for ways to boost Legal Recurring Revenue. Technology that automates workflows is highly recognized as one of the best ways to increase law firm revenue. By addressing the fundamental need to automate compliance workflow tasks, firms can dedicate more working resources towards high growth revenue-driven strategies for the firm. This enables practitioners to become more productive, more profitable, and increase both their personal value to the firm, and the firm’s overall reputation in the marketplace.

Performance driven legal teams have a burning desire to provide exemplary customer service to their clients. Strong interpersonal client relationships are the bedrock of a firm’s profitability, allowing the business to scale growth by expanding Legal Recurring Revenue.

Using technology to implement document automation is one of the best ways to deliver those strong interpersonal client relationships. In an age where people can uncover immediate answers to their questions, clients expect instant responses to their legal queries.

Why document automation enhances client support

Client minute books, corporate records, and other official documents contain most of those pressing answers. Automated workflows to manage those documents speeds up the delivery process to provide those answers, ultimately improving client satisfaction.

Here’s a scenario: suppose you’re a mid-size corporation with pressing legal needs. You have the option to be represented by two different firms.

Scenario #1: paper documentation

At one of those firms, all minute books and corporate records are stored in paper format. Considering it takes 5 minutes to process a single document within minute books, it takes hours to uncover specific answers to your legal questions. It’s very time consuming, and it leaves your own in-house counsel waiting on important information to protect the interests of the business.

Scenario #2: document automation

At the other firm, they use entity management software to automate legal documentation. It’s a much faster workflow compared to the paper trail process, enabling your legal professionals to uncover pertinent information in corporate records within minutes. Your own team receives the immediate confirmation that they need to move forward with strategic decisions to protect the interests of your business.

Which firm has more satisfied clients?

Time is a luxury that very few can afford, especially when it comes to legal decisions that can impact the future of a business. A firm that embraces document automation as a standard operating procedure can provide immediate legal support, enabling clients to utilize hours of their own time more efficiently and effectively. A business that receives this kind of support is far more likely to be satisfied with their legal representation.

Benefits of using document automation technology

Since document automation is the more effective method to satisfy client needs, how do you utilize technology and deliver those support services? Cloud-based subsidiary management software is the best way to centralize all minute book records, manage subsidiaries, and save valuable time on compliance tasks.

No code document assembly

This is one of the greatest benefits of document automation technology. Large law firms may have in-house IT departments, but many small to mid-sized firms don’t have that luxury. With platforms like MinuteBox, there’s no need for in-house development support.

Enterprise grade scanning services are built right into the platform’s capabilities with no coding or technical expertise necessary to complete the process. Your legal professionals can upload minute book records in minutes into carefully organized files that allow for the seamless management of client needs. This further fulfills the need to provide fast and efficient client support, which will generate ongoing revenue for the firm for years to come.

Maintain up to date shareholder and transaction records

Shareholder ledgers keep track of all outstanding shares owned by different investors and record all important dates pertaining to the sale or transfer of shares. It’s a very important record that also includes personal information about the various shareholders within the company.

By digitizing shareholder ledgers into secure cloud-based platforms like MinuteBox, all of that information is stored under the strictest confidentiality. The platform includes built-in biometric and hardware key authorization security measures to protect any information from leaking to the public or from being shared to unauthorized parties. It also organizes and pulls up all corporate records using advanced search filters and parameters, bringing all relevant information to the screen in mere minutes of searches.

Integrated e-signatures double up efficiencies

Routine compliance tasks are some of the most time consuming aspects of corporate recordkeeping. Using platforms like MinuteBox to automate documentation, you can reduce the time it takes to acquire signatures and approvals to a matter of minutes (or even seconds).

Built-in e-signature workflows make the process of securing approvals much faster and easier. The technology also includes date, time, and location stamps that allow you to document all important information related to the approval of minute book records or the sale of new shares to important investors. It’s the ultimate solution to signature and identity verification that accelerates workflows and boosts client satisfaction.