Insights and updates
from MinuteBox

Any company that intends to incorporate within Canada must abide by the Articles of Incorporation as mandated under Canadian law. Administrative tasks are among the most important steps of the incorporation process, including the rules for corporate governance as well as the parameters to report the transfer and issuance of corporate shares.

When it comes to shareholder rights, there can be no room for error. For the sake of ensuring the business entity is compliant with federal law, it’s crucial that all share transaction records are diligently tracked and reported.

When does a corporation issue new shares?

At the outset of a company’s article of incorporation, shares are issued to the initial round of investors in the business. Their names, home addresses, and positions on the Board of Directors are listed in the official shareholder ledger as the statement of record.

Shares can also be issued at later dates in the lifecycle of the corporation. The company can issue shares from its treasury to new investors who are not current shareholders as well as issue shares to existing shareholders at the discretion of the board. The primary reasons that these shares are issued include any of the following:

• To raise additional capital from new or current shareholders
• To add a new board member whose investment is in the form of knowledge, contacts, or technology to enhance business operations; this is a form of a non-capital investment
• To celebrate higher than expected profits that are shared by all shareholders
• To assist with capital tax or estate planning

A relatively new legal structure is an Employee Ownership Trust (EOT), which allows employees of a corporation to become shareholders without paying directly for the shares. The shares are held in trust, and employees receive payments for their shares as a percentage of corporate profits. The federal government intends to amend legal corporate language with rules and structures for EOTs, which should include details of how to report these types of transactions in shareholder ledgers.

What information belongs in a shareholder ledger?

Whenever shares are issued by the corporation or transferred from shareholder to shareholder, the transaction must be recorded in a detailed shareholder ledger. A shareholder ledger is necessary for corporations to comply with Canadian federal law.

A fully accountable shareholder ledger must contain personal information about the shareholders who invested in the corporation. It must also include the share certificate numbers attached to each issuance or transfer of shares, the total amount of outstanding public shares, as well as the current and projected capital share structures for the corporation.

All of these details must be accurately reported in the shareholder ledger. You can learn more about how to craft the perfect shareholder ledger using our helpful guide to ensure your company is fully compliant with the articles of incorporation.

How to automate share issue and transfer reporting

Maintaining an accurate, up-to-date accounting of all share issues and transfers is vital for corporate compliance. Each time a new share transaction is issued, a record containing the name of the involved shareholders, the date of the transaction, the current value of the shares, and additional details must be inputted into the shareholder ledger.

As you can imagine, this process takes a significant amount of time and resources for corporate counsel to maintain accurate records. The task is all the more time consuming when records are maintained using paper documents, requiring counsel to take time and manually write each and every important note related to the issue or transfer of shares.

How much time do legal professionals spend maintaining these records? Rather than focusing on more revenue-driven actions for the corporation, they spend valuable hours on manual tasks to comply with federal law.

Entity management software streamlines share transaction reporting

Thankfully, this outdated method of corporate recordkeeping no longer has to be the norm for legal professionals. Instead, all records can be maintained electronically using entity management software to maintain a digitized shareholder ledger for corporate compliance.

Unlike traditional methods of reporting share transactions, digital shareholder ledgers can be updated using advanced drag and drop features to input new data. Imagine how much time can be saved by inputting share transaction records into a digitized ledger as opposed to manually writing out all information related to the issue or transfer of shares. That’s valuable working time that can be reallocated towards helping to grow the business in more productive ways.
Reporting on share issues and transfers is a mandatory requirement for corporations to abide by federal laws. But the process can be far more efficient with the right subsidiary or entity management solution, saving valuable time. Having these advanced pieces of software can even help recruit the most talented legal minds to join your company, as they’ll appreciate the advanced technology at their disposal.

On October 4, 2023, the US Department of Justice announced a new policy known as the Safe Harbor Policy. Deputy Attorney General Lisa Monaco made the announcement, aligning the new policy with the DOJ’s Corporate Enforcement Policy that seeks to uncover criminal conduct within corporate entities.

Here’s a quick breakdown of what the Safe Harbor Policy is, what it means for business entities, and how to remain in compliance with the new protocols should you undertake a merger or acquisition of a subsidiary business.

What is the DOJ Safe Harbor Policy?

The DOJ Mergers & Acquisitions Safe Harbor Policy is a voluntary self-disclosure that aims to provide greater clarity for acquiring companies. The policy outlines benefits to acquiring companies who uncover criminal conduct by the target company during the acquisition phase.

Acquiring companies can use the Safe Harbor Policy to minimize any legal consequences for their corporate stakeholders if misconduct by the target company is identified. Legal protection is granted if the acquiring company:

• Self reports the criminal conduct within the safe harbor period
• Fully complies with the DOJ during the investigation
• Engages in timely, requisite, and appropriate disclosure of financial fraud

Acquiring companies that voluntarily self-disclose such information will be granted a presumption of declination by the DOJ. Essentially, this means that the federal government will not lay any charges against the acquiring company should they cooperate with the DOJ.

What’s the timeframe to comply with the Safe Harbor Policy?

The DOJ has mandated specific timeframes for acquiring companies to comply with and benefit from the Safe Harbor Policy. Acquiring companies have up to six months after a merger or acquisition deal closes to voluntarily self-disclose any discovered financial malpractice by the acquired company.

Additionally, acquiring companies have up to one year after the closing date to remediate any ill-gotten gains in a timely and appropriate manner. The DOJ may extend both of these timeframes on a case-by-case basis under what they describe as a “reasonableness analysis.”

Purpose of the Safe Harbor Policy and similar legislation

Legislation like the Safe Harbor Policy, the Corporate Enforcement Policy, and other DOJ protocols are part of a broader effort to crack down on white-collar crime. North American society incurs serious consequences from white-collar crimes like money laundering, corporate fraud, and other examples.

Innocent people end up paying the price for these corporate crimes, impacting the health and well-being of people who fully comply with jurisdictional laws. The Safe Harbor Policy is designed to incentivize cooperation with authorities when mergers or acquisitions uncover examples of misconduct, fraud, and other criminal activities.

Other prominent legislation, such as the Corporate Transparency Act, requires corporate entities to provide diligent records about beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This is another example of the government mandating greater transparency and accountability amongst the country’s largest business entities.

Use legal technology to conduct in-depth M&A due diligence

As an acquiring company leading the merger or acquisition process, it’s incumbent upon your team to conduct diligent due diligence of the target company. After all, if you detect any signs of shady or nefarious conduct by the target company, you may decide to pull out of the process before a deal can be finalized.

To assist with the due diligence process, it’s best to use legal technology like entity management software. Entity management software is a platform built by legal professionals for legal professionals that functions as a single source of truth for all corporate reporting data.

Simply upload reporting data supplied by the target company’s legal, compliance, financial, HR, and other departments into the entity management platform. The platform’s intuitive nature organizes all reporting data into structured minute book records that offer a holistic overview of the target company’s fiscal, legal, and compliance positions.

While nothing is fool-proof, there may be data that’s missed during the due diligence process that could cause problems with the DOJ post-acquisition. The Safe Harbor Policy will protect your stakeholders should this occur, provided you voluntarily disclose your discovery to them.

Ready to modernize mergers & acquisitions while shielding yourself from legal or financial consequences? Join the MinuteBox revolution today and remain in compliance with the laws, no matter what subsidiaries you bring under your corporate umbrella.

Let’s say you manage a law firm. Business is booming so much that the needs of the legal team outpace the amount of resources your existing team can provide. That means it’s time to expand the size of your office with new lawyers and paralegals.

The skills and job description of a law clerk are fairly consistent from firm to firm, and lawyers are on the job to analyze, administer, and utilize legal files on behalf of their clients. Experienced lawyers and law clerks are motivated to work for firms where they can make the most effective use of their time. One of the ways your firm can stand out is through the technology used by your team of paralegals to simplify their day to day tasks. Young, upstart professionals eager to take on the world are far more attracted to modernized firms that utilize digital, centralized solutions.

What do high quality legal professionals want in a firm?

Trained lawyers and clerks are motivated, go-getting and they want to make a difference for their firms. They recognize the value in spending more time on tasks that can help grow the firm and generate fresh revenue to expand the business.

Since this is the mindset of passionate professionals, what will make your company attractive to eager hires? Firms that believe in and practice innovative solutions are in prime positions to recruit the next generation of quality legal talent. Young upstarts are familiar with how technology automates many rudimentary tasks, and they’re eager to manage more of their own tasks with the assistance of platforms like cloud-based entity management solutions.

Make it easier to share minute books

Motivated lawyers and paralegals all understand that time is money. They want to execute tasks as efficiently as possible. This includes the process of sharing minute books and chasing down the appropriate party for a signature to help move files along.

Show the next recruit of talent that your firm is a leading innovator when it comes to entity management technology. Use a platform that makes it easy to share entire minute books or gives you the ability to restrict access to particular pages. You’ll have faster, better organized and more secure legal transactions that will help your team complete their tasks more efficiently. They can rededicate more of their own time towards the tasks that are most likely to boost revenue for the firm.

Solve the “single key holder problem”

One of the biggest struggles for any firm is finding the right information at the appropriate times. In many cases, one person is designated as the single key holder or the gatekeeper to many of the firm’s records.

For an upstart legal professional, this way of doing things is not efficient and is deemed unproductive. Using cloud-based entity management platforms, you can solve this problem by hosting all minute books and company recordsin a secure cloud-based database. Anyone with access to the platform can simply go in and pull out the appropriate files to send off on an as needed basis. This helps your team make better use of their own time, which is a very attractive selling point if you want to hire the next generation of talent to your team.

Dedicate more of your team’s time towards billable hours

A 2018 poll of Canadian law firms found that 40 percent of respondents believe that blended or hybrid law clerk/legal assistant positions had become “somewhat more common” in the two preceding years. Another 12 percent of participants anticipated those types of jobs would become even more important over the following two years.

Why is this an important trend? Paralegals have the skills and training to perform many of the tasks that might otherwise be assigned to a legal professional. You can assign billable hours for any work the respective clerk completes for your client’s case, but at a lower rate than a lawyer’s time would be billed, creating benefits for your clients.

It means law clerks can perform valuable work and earn money for your firm. At the same time, you’re not overloading expensive billable hours to your client for fixed fee or routine work. This means you can get the tasks done, earn some money for the effort, and still provide more value-added services to help your clients’ needs.

Are you ready to bring the highest quality talent to your business? Join the MinuteBox revolution so that you can create an environment that is guaranteed to attract the best and brightest law clerks to your firm.

You’re in bed in a cold sweat. You’ve been tossing and turning for hours. It’s 4:15am and you reason that if you fall asleep right now, at least you’ll get a few hours of quality shut-eye. But you know it’s in vain. It hasn’t happened for months; why is tonight any different?

It’s not.

You’ve slogged for years with your team, navigating the waters of incorporation, team building, engineering and business development. You’re trying to build a company based-off an idea in the legal space.

You’ve spent years studying in law school and several more learning the profession as a lawyer. You had money in your account and a steady paycheck. You had respect from your peers, your family and other professionals. You had a beautiful office in a gorgeous tower overlooking the city. You had certainty and predictability. You had access to the good life.

You had what so many have sought after and you said “No thank you.”

And now here you are, looking up at the ceiling, questioning your choices, wondering if your decisions were ill-fated because they were based on hubris. Your bank account is near empty, you live on a shoestring budget. You’ve cashed out your savings and every day is one step closer to admitting defeat.

And every now and again you get a friendly “don’t worry” from your colleagues, reminding you that “you can always go back to being a lawyer.”

You are genuinely afraid of failure.

I am often asked what it’s like being an entrepreneur in the legal space. What is it like building a technology service company that offers services to law firms all over the world?

My response is the same. It’s lonely. Or at least it was, for a long time.

A few years ago, I was asked to speak at a panel at the Law Faculty of Queens University, presenting to the students of the Venture Capital and Private Equity law club. Seated next to me were two lawyers both practising in the startup and emerging company departments of their large (and very successful) national firms.

The lawyers eloquently described their roles in the legal side of fundraising, how they were instrumental in providing advice in helping secure VC investment for their startup clients, thereby helping those companies grow.

The role of my lawyer colleagues was instrumental in helping their clients succeed.

I wanted to impart a somewhat different perspective on the students. I wanted them to understand what investment money means to a startup, especially in the legal space. Investment means my team gets to eat, pay their mortgage and pay for their childrens’ dentist appointments. It means Christmas gifts under the tree and a few restaurant dinners a month. It doesn’t just mean business survival, but actual human survival.

Most of the legal tech startup life is unglamorous. You are in a sector that has resisted change for generations. Everything is working against you, from the billable hour model to the partnership structure of law firms to the lack of funding opportunities available to those in your industry.

You are trying to find your professional place in the world and you don’t always know where you fit. It’s daunting. It’s draining. Reaching the legal technology apex often seems insurmountable. The sides of the mountain are just too slippery.

Years later, you’re still in bed, still sweating and wide awake when you should have been long asleep. The sheets, half on, half off provide no comfort, as the birds chirp outside your window welcoming the coming dawn. You start counting on your fingers and toes and quickly realize you’ve spent more time building legal technology than actually practicing law. Even if you wanted to return as a lawyer, would you remember how to practice? Would anybody even want you?

And then, out of nowhere, you crack a wry smile. You look back on everything you have done up to this point. You’ve built amazing technology. You have clients who pay for your service. You have gained experience in tech, business and life. And you even begrudgingly admit to yourself that if someone would have told you that after several years you’d be in such a position, you would have gladly accepted the opportunity with open arms.

Fully awake, looking up at the beige plastered ceiling, you accept that you’re exactly where you belong.

You then get up and start your work day.

Innovation and efficiency are two invaluable perceptions that should automatically come to mind when clients think about your business. From business leaders to corporate counsel and legal professionals, everyone wants innovative technology that provides clear, concrete solutions in the most efficient manner possible.

In the legal community, there’s been a slower adoption of innovative technologies. Many law firms and corporate counsels still rely on paper files to document minute books, corporate records, and business transactions. Many firms continue to stick with the old ways of doing things, despite the fact that 77 percent of business owners want more efficient access to corporate records than what their legal representation currently provides.

Benefits of subsidiary management software

Firms that have chosen to modernize their processes for minute book recordkeeping use subsidiary or entity management software. These solutions help companies define and manage their business entities within digital environments.

All minute books and corporate records from a business are uploaded to cloud-based systems. In essence, this allows anyone with account credentials to view the documents, at their own convenience, from anywhere in the world.

In addition to the added efficiency and cybersecurity features, subsidiary management platforms are also cost saving solutions for firms. Believe it or not, some businesses spend up to $20k per year for the time spent by each legal professional to manage physical binders of corporate minute books.

By moving all corporate documents to a cloud-based secure environment, those records can be found, sorted, organized, and pulled within minutes. As a result, all of those hours spent sorting through files are reallocated towards areas of the business that directly contribute to growth.

Why companies need subsidiary management systems

Subsidiary management solutions help companies become more efficient. Their benefits outline compelling reasons to implement these platforms and innovate your existing processes.

But what are some of the core business reasons why a firm needs subsidiary or entity management platforms? Here are three prime examples of how these solutions can improve your organization.

Reduce overhead and administrative business costs

It costs most companies up to $2,000 to store one five drawer filing cabinet at the office. Depending on the volume of physical corporate documents you have to maintain, you could need dozens of filing cabinets to properly organize all of the paperwork. On top of the storage costs, you have to factor in the amount of time spent filing, sorting, and managing all of those minute book records.

Subsidiary or entity management software radically simplifies the entire process. Get rid of those filing cabinets and help your clerks and legal professionals dedicate more time towards billable hours for clients.

This is also a great selling point to attract new clients to your business. If you can guarantee to your clients that your firm has the ability to minimize time billed for administrative work, your legal services look a lot more enticing to companies in need of those services.

Improve direct relationships with your clients

Nowadays, people have instant access to information. Due to this convenience, people expect immediate answers to their questions so that they can move onto other parts of their days.

Here’s a scenario: suppose you have a client asking about a particular document in one of their corporate records. If you have to go through paper documents one by one to find that record, it’s going to take a lot of time before you can get back to the client with an answer.

In another scenario, a client of a different firm that does use subsidiary management software asks the same question about one of their records. Due to the speed and convenience of finding those files within the platform, that client has their answer within minutes.

In these two scenarios, which client do you think is the most satisfied and would positively rate a firm for having exceptional customer service? By using modern technology, you can build more interpersonal client relationships that become lifelong business partnerships. This may even result in your satisfied client providing free word of mouth advertising to help you gain brand new clients for the firm.

Attract the most prolific talent to join the firm

There are always experienced legal professionals who are ready to make a change in their careers. But they don’t want to just go to any firm; many professionals look for companies that utilize innovative technology because they understand those firms will operate more efficiently.

An efficient operation means more opportunities to increase Legal Recurring Revenue. The opportunity to earn more and contribute real growth towards a firm are very attractive benefits to a highly motivated professional.

Subsidiary management solutions are prime examples of innovative technology that are transforming how the legal entity space operates. Experienced legal minds are attracted to these new and bold solutions, which will help your firm attract these talented professionals rather than lose out to the competition if they’re looking to make a change in their careers.

Are you ready to bring innovation to your legal organization? Join the MinuteBox revolution so that you can become more efficient, provide greater client satisfaction, and help attract the most sought after legal minds in the industry.

Many industries have wrestled with the question of how to manage their corporate data. Do they opt for on-premises or cloud-based servers to host their data?

The legal industry has rapidly incorporated modern technology into its operations and procedures. Legal entity management systems are one example of modern technology that helps law firms centralize client data and minute book records in one convenient platform.

When entity management platforms were first developed, they were built using on-premises servers. In recent years, entity management systems have been developed on cloud-based servers. What’s the difference between the two server types, and how are cloud-based solutions more beneficial to the firms that use them?

What’s the difference between cloud-based and on-premises servers?

The most notable difference between on-premises and cloud-based servers is where they’re located. This is one of the biggest factors for any firm to consider when deciding how best to incorporate legal entity management technology into their workflows.

On-prem servers are operated on hardware infrastructure, and they’re located in a dedicated server room within the office. Cloud-based servers are managed by the internet provider and stored within the provider’s own offices. The servers are accessed through the cloud using web browsers or a third-party interface.

Top benefits of cloud-based entity management solutions

Now that the distinctions between the two servers are broken down, let’s break down the benefits of cloud-based servers and outline why they’re the best option to help law firms modernize legal entity management.

Cloud-based servers enhance accessibility to corporate data

During the COVID-19 pandemic, remote work was how most organizations kept their businesses running in response to health-induced lockdowns. Though the health crisis has passed and the lockdowns have been lifted, the demand for flexibility and remote work remains as strong as ever. It’s not just employees who want more flexibility and autonomy; business leaders themselves want the ability to review corporate documents from remote locations.

Cloud-based servers give anyone with access to entity management platforms the flexibility to access corporate data from any location. Enhanced accessibility to minute book records makes it easier for firms to secure client sign-offs and approvals on legal documentation. It speeds up the process so that firms can be more proactive while supporting their clients.

Operating in the cloud creates efficiencies and boosts productivity

Using cloud-based entity management systems, all clerical and administrative tasks become more streamlined. Since the average law firm has fewer than three full-time employees, bandwidth is always a pressing challenge for firms.

Cloud-based entity management platforms have built-in templates to help firms streamline the creation, organization, and finalization of all minute book records and corporate documentation. Inputting minute book data takes only a few seconds, and the platform’s intuitiveness automatically transcribes that data into structured PDF-style documents.

These records are stored securely in the cloud, enabling anyone with administrative access to the platform to view the documents at their own convenience. Edits or revisions can be quickly completed, and the platform functions as a single source of truth for all members of the team. This makes entity management more efficient, more productive, and more scalable.

Law firms are not required to technically maintain cloud servers

Remember how we mentioned that on-premise servers are stored and managed within the office space itself? Someone on your team with technical expertise is required to manage those servers to avoid any malfunctions that risk crashing your operating systems. Since the average firm only has three people on staff, it’s highly unlikely that one or more of them will have the technical capabilities to manage those servers.

In contrast, cloud-based servers are managed by internet providers, who have entire departments of technical gurus on-hand to manage those servers. Your legal team can focus solely on entity management to support clients instead of worrying about the technical challenges that come with server maintenance.

Cloud-based servers add no additional costs to your office budget

Picking up on the previous thread, on-premise servers that are stored in your office space take up valuable office real estate. You need a dedicated server room for storage, requiring a larger office space that increases monthly office rental costs.

Cloud-based servers are not your firm’s to manage, which means you don’t need to account for that additional real estate when selecting an office for your firm. This is one of the main reasons a growing number of firms are choosing cloud-based server storage.

In a cloud data security report, which includes surveyed responses from 720 participants, 80% of respondents said they use cloud-based servers for data storage. Even more telling is that 61% of respondents said reducing office operating costs was one of the driving factors that led them to adopt cloud-based technology.

Legal teams operate faster and can devote more time to servicing clients

Since cloud-based servers create faster and more streamlined workflows, legal teams can spend less time on routine clerical or administrative tasks. Cloud-based entity management systems centralize any previous disparate operating systems and allow all members of the team to make faster decisions from one centralized platform.

As a result of this modern workflow, teams can devote more time to the work that ultimately matters: servicing clients and boosting Legal Recurring Revenue. Client satisfaction rates are one of the key metrics to earning repeat business from clients, as well as generating more referral business through word of mouth advertising from satisfied clients.