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The Canada Business Corporations Act (CBCA) was first introduced in 1975 to replace the previous legislation entitled the Canada Corporations Act. The primary purpose of the CBCA was to:

• Revise and reform the law applicable to business corporations incorporated to carry on business throughout Canada
• Provide uniformity to business law across Canada
• Allow federal corporations incorporated under the CCA to continue under the CBCA

Some of the ways the CBCA reformed how business is conducted in Canada had to do with the transfer and issuance of shares, as well as updated shareholder rights. The new laws are important for businesses to understand should they plan to incorporate in the near future.

How the CBCA specifies the transfer and issuance of shares

Under the CBCA mandate, all corporations that issue shares to shareholders must maintain a securities register to remain in compliance with federal law. A securities register, also known as a shareholder register, lists all the issuances of a corporation’s shares to its registered shareholders. The register contains personal information about the shareholders; additionally, it lists the number of shares held by each shareholder, and the date that shares were issued or transferred to the various shareholders.

The corporation is the issuer of shares. In most jurisdictions across Canada, the issuance of shares verifies shareholder rights and interest in the corporation’s rights or property. Corporations headquartered in Quebec follow a similar mandate by issuing shares that confer rights to the corporation’s property.

Shareholder rights under CBCA provisions

The CBCA also outlines specific shareholder rights that must be upheld by all corporations within Canada. One of the most important provisions within the CBCA is the protection of minority shareholders’ rights. Regardless of whether shareholders hold majority or minority ownership of the corporation, the CBCA states that all shareholder rights must be protected and respected. There are significant and far-reaching financial penalties if those rights are violated.

Additionally, the CBCA states that:

• There is no mandatory requirement for a fixed number of shares
• The idea of “par value” shares is an abolished concept and a prohibited practice
• Recognition that shares can be classified under different share classes
• At least one share class in every corporation must always have unrestricted voting rights
• Shares may not be issued on partly-paid or a subscription basis

There are also laws for “bearers of shares.” Under the CCA, bearers of shares did not have the same rights as registered shareholders. The CBCA states that bearers of shares do have the same rights; however, the “bearer share” is not recognized by name. The bearer share will appear in the shareholder register simply as “bearer.”

Corporations also have authorization to issue fractional shares, and they have the right to issue maximum flexibility, particularly in the case of amalgamations, share exchanges and share splits. Board directors are entitled to fix record dates to determine the shareholders’ rights to receive dividends, receive notices of meetings, or participate in liquidation distributions.

How to protect shareholder rights with entity management technology

The CBCA demands that all corporations maintain up to date shareholder registers to comply with federal laws. Traditionally, corporations have kept records of all shareholders, issued shares, and share classes in a physically binded ledger.

However, think about how this approach looks for a company in the 2020s. Rather than an innovative and accessible solution to document shareholder information, a physical ledger is a handwritten document. It requires tedious amounts of time and energy spent to update new shareholder records, or to record transfers of shares from one shareholder to another.

Innovative corporations use entity management software, like MinuteBox, to create, amend, and verify information in a digital shareholder ledger. Instead of writing notes into a binder, corporate counsel can use entity management platforms to drag and drop new data into the ledger in just a matter of seconds. This is a far more time efficient way to keep track of all important shareholder information.

The best part about this approach is that platforms like MinuteBox are cloud-based solutions. This means that all shareholders can access the ledger from the convenience of their own homes or wherever they may be in the world that can connect to the internet. The system is protected with biometric and hardware key authentication parameters. This ensures only those with shareholder rights have access to the ledger, which is very important to protect shareholder privacy from the prying eyes of the public.

People don’t like change. That is a humanistic trait that resonates with professionals all over the world. You’ve done things a certain way for five, ten, maybe twenty years, and you’ve been very successful with your established workflow. You don’t want to be told that you have to change.

This is a common roadblock when companies attempt to introduce automated technology to their teams. In industries like the legal community, which have traditionally been very resistant to modernized workflows, resistance to change is particularly strong.

What are the common reasons for resistance to change?

There are two major reasons why companies, including law firms, resist adopting changes to their collective workflows.

The first major reason is a human trait as old as time itself. People get set in their ways and don’t want to adapt to anything new. If you’ve been doing something successfully for a long time, your natural instinct is to push back against new workflows with the question, ‘why should I change what I’m doing? If it ain’t broke, don’t fix it.’

The second major reason is a similar human characteristic. People don’t like being told that they have to do something a certain way. Most people who are hired to do jobs prefer to be onboarded and then left to their own devices to get the work done.

Nearly 70% of professional workers have considered leaving their jobs altogether because of their frustrations with micromanagement. Forced adoption of new workflows is considered by many workers to be an aggressive form of micromanagement that can lead to resignations.

Tips to break down resistance to automated technology

Let’s look at two possible scenarios when addressing this objective. The first scenario will present the objective from the point of view of a named partner at a law firm. The second scenario will present the objective from the point of view of a paralegal at a law firm.

How named partners introduce automated legal technology to their firms

As a named partner at a law firm, it’s your job to ensure that business continues to grow. Your concern is acquiring new clients and servicing existing clients to the best of your firm’s ability. All these priorities are part of a broad effort to increase Legal Recurring Revenue for the firm.

Automated technology is designed to help your team of legal talent operate more efficiently. Solutions like entity management software streamline how your team completes routine clerical and administrative tasks. Streamlined workflows allow all legal talent to dedicate more time to servicing clients, increasing billable hours for the firm.

Therefore, as a named partner, you want your team to reap the benefits of entity management software. You can introduce a mandate for the whole firm to onboard onto the platform, or you can host a firm town hall to introduce the software and address any questions skeptical peers may have. Your position gives you the authority and influence to make this transition happen.

How paralegals introduce automated legal technology to their firms

As a paralegal, you’ll be the primary user of legal technology like entity management software. You have much less authority and influence than a named partner in the firm. Therefore, you’re faced with the much grander task of convincing the partners to purchase the software.

To complete your objective, make the case similar to presenting a legal argument in court. Conduct your research and lay out the facts to the chief decision makers at the firm. Reference statistics showing that most legal professionals devote fewer than three hours of their days to client billable hours because of the abundance of clerical work to complete.

Entity management software and similar automated legal technology drastically reduce the time spent on repetitive clerical tasks. Show the partners that a small investment in such a solution will pay itself back in more time that can be spent growing Legal Recurring Revenue for the firm.

How to overcome resistance to automated legal technology

Regardless of your title and level of authority, there will be challenges convincing your entire legal team to adopt automated legal technology. So what’s the best way to overcome that resistance and break through the barriers?

Sticking with the theme of dual approaches, there are two great ways to overcome internal resistance to legal technology. The first is to be as open, transparent, and inclusive about the new workflows.

Suggest the possibility of acquiring a new piece of software in a firm-wide memo, email thread, or slack channel (if you use slack at your firm). Open a forum for a robust discussion about the pros and cons of acquiring new legal technology so that you can address people’s concerns. This has proven to be a very effective method to break down resistance to new solutions.

The second approach is to encourage your legal talent to review testimonials from fellow legal professionals in other firms or corporate settings. Gain an outside perspective on how automated legal technology like entity management software changed the lives of the professionals in those other settings.

If it worked for them, it can work just as well for you. Take that feedback into consideration, and you may become very excited to change your approach to legal entity management with a more modern innovative solution.

Interested in learning more about the automated benefits of legal entity management technology? Wait no longer and join the MinuteBox revolution to transform your workflows into more efficient and more productive processes.

Regulators say that effective corporate compliance begins at the top. They encourage company executives and directors to set an example in terms of a responsible culture built around ethics, morals, values, and a willingness to do the right thing.

There are overlaps between compliance and ethics that influence corporate cultures. When stakeholders demonstrate their capacity to operate in ethically responsible manners, the message is received by the rest of the corporation. Employees in the organizational hierarchy abide by the same ethical principles and, therefore, create a culture that upholds compliance.

What is the culture of compliance?

A culture of compliance is a set of attitudes, behaviours, and values that guide corporate workers to align with policies, procedures, and regulations. Essentially, a culture of compliance uses ethical principles to enforce legally binding protocols.

Some companies create diligent compliance culture programs that are shared with their employees. The Starbucks Standards of Business Conduct is one prime example, in which the corporation describes a series of ethics, values, and principles that all employees must adhere to as they conduct their day-to-day responsibilities.

Why is culture important in compliance?

Companies with strong organizational cultures empower employees to operate under both legal and ethical best practices. According to Gartner, strong compliance cultures produce both financial and non-financial benefits for the corporation. Specifically, they found that:

• Employees in strong cultures are 90% less likely to passively observe misconduct
• Employees in strong cultures are 1.5 times more likely to report misconduct
• Employees in strong cultures are 2 times as likely to be engaged with their companies
• Employees in strong cultures are 2.5 times more likely to voluntarily report misconduct

The commonality is a sense of trust. When people trust the corporate values; that they can safely live by those values, and that they can report misconduct without fear of reproach; they’re more likely to abide by those principles. As a result, any behaviour that could compromise compliance is dealt with before it becomes an issue for the business.

6 steps to achieve a culture of compliance

Creating an effective corporate compliance culture isn’t something that happens overnight. It takes time, patience, vigilance, and resources to implement the proper cultural protocols.

Here are six key steps recommended by Thomson Reuters that your compliance team should follow. Use these recommendations to achieve an effective culture of compliance.

Create an internal awareness initiative

Regulators are constantly changing compliance protocols, and employees won’t know how to abide by the proper protocols if they don’t know about them. Ensure your compliance managers have the resources to remain on top of these changes. Your compliance team is your first line of defence to uphold corporate compliance cultures.

Set the tone that the C-suite will communicate changes

Culture is set right from the top, and the C-suite executive team must communicate the cultural expectations to the rest of the organization. Expectations, policies, and procedures must be set by leadership, and there must be transparent communication of those expectations to shape the culture that develops from those guidelines.

Disseminate cultural protocols to employees

As your compliance team learns about changes that could impact corporate culture, they need the means to educate the rest of the company. Give your team the resources to produce educational content that can be disseminated to the rest of the company. Education is the best weapon against non-compliance activities.

Use the right technology to enforce compliance

Part of the educational effort is through the use of technology. Create e-learning programs like videos, modules, and quizzes that test employee awareness of compliance culture protocols.

You should also use technology like entity management software to create structured compliance programs. Entity management platforms have built-in compliance frameworks that are easy to use. Plus, they provide prompt updates to your team if any data is missing, filings are late, or anything that could trigger non-compliance.

Develop a rewards program for positive cultural behaviour

Incentives are the best motivator to prompt responsible actions. Leadership can use suitable compliance incentives as rewards for abiding by the compliance culture. Employees are far more likely to live by cultural values when they understand how they benefit from doing so.

Establish whistleblower programs that protect case reporting

Employees must feel safe coming forward when they witness unethical behaviour that amounts to misconduct. By creating a whistleblower program that protects employees, people will find the courage to report misconduct so that the compliance culture remains in effect.

Digitization of minute books and corporate records makes things more convenient for law firms and their clients. Digitized records are far more secure than paper documents, and there’s virtually zero risk of any files being lost or misplaced, as can be the case with physical records. More importantly, entity management software can help improve client relationships and boost client satisfaction.

Clients have the choice of working with a firm that embraces innovative technology, capable of providing answers to pressing questions in a matter of minutes. They can also work with firms that rely on physical binders of corporate documents to cater to their needs, which requires hours of sorting, filing, and re-filing to uncover answers to potential questions. Which scenario is most likely to lead to satisfied clients and long-term working relationships that support the growth of your own firm?

So what are some examples of how companies have benefitted from entity management software and the digitization of minute book records? Here are three key success stories that will hopefully inspire you to pursue a similar path with your own business.

Bianchi Presta LLP: “exactly as advertised”

Bianchi Presta LLP is a mid-size full-service law-firm that offers top quality legal services in a cost-effective and timely manner. Part of their pledge to fulfill that commitment required a modernized approach to minute book management and corporate record documentation. They wanted an entity management platform that could set the firm up for success.

Following a failed trial relationship with another company, Bianchi Presta LLP turned to MinuteBox as a trusted provider of these solutions. An initial meeting and presentation of how the platform works, as well as honoring commitments to properly train and onboard the Bianchi Presta LLP team, led the firm to implement MinuteBox’s solution.

MinuteBox’s documentation experts arrived on-site at the Bianchi Presta LLP offices. Within a matter of two days, they had uploaded over 3,500 corporate records into the cloud-based platform and successfully onboarded several members of the Bianchi Presta LLP team.

SHTB: Digitized minute book management process

Stevenson Hood Thornton Beaubier (SHTB) LLP is a full service law firm that works with individuals as well as large, occasionally multinational corporations. For years, they maintained over 2,000 physical minute book records documenting all of their work to support client needs.

Upon learning about entity management software, SHTB saw an opportunity to digitize their minute book archives. Connecting with MinuteBox, their legal team discovered the cost-saving benefits of entity management technology that would reduce office storage space for physical minute book binders.

“It felt like our office space was packed to the rafters with minute books, and we thought ‘what do we do now? What really appealed to us about MinuteBox was that their cloud-based entity management solution was exactly what we needed once we converted our books from physical to digital.”

• Zeke E. Zimonick, Partner, Stevenson Hood Thornton Beaubier LLP.

Lewis Birnberg Hanet LLP: “best gift any firm gives clerks”

Lewis Birnberg Hanet, LLP (LBH) is an Entertainment Law Firm serving Canada’s booming film and television industries. Though they rely on technology to conduct vast amounts of legal research for their clients, they were initially reliant on paper-based minute book records to oversee client needs.

Realizing they required a digitized database to keep up with the needs of their clients, LBH learned about MinuteBox as a reliable resource to:

1. Centralize all client minute books into one digital database
2. Find instantaneous answers to pressing client questions

The LBH legal team would traditionally spend hours tracking down important client information using manual searches through physical minute book binders. With MinuteBox, searches through important records are completed within a matter of minutes. This allows their team to better service their own clients and support more meaningful relationships with their points of contact.

“MinuteBox is the best gift any firm could give their law clerks. It preserves the look and integrity of the traditional burgundy minute book while also creating a searchable database of your complete collection of binders.”

• Nora M. Webster, Corporate Law Clerk, LBH

Is your firm ready to embrace the digitization of minute book records? Join the MinuteBox revolution so that you can find the same degree of success as these other firms and build more long-lasting, sustainable relationships with your most valuable clients.

Corporate paralegals are essential team members of a general counsel or corporate legal department. Their primary duties are to assist professionals with account research, records management, and consultations with other department heads or external vendors. Paralegals are essential cogs in a corporate legal machine.

A sizable percentage of a corporate paralegal’s day is tied up in the management of clerical and administrative work. All these tasks are essential to the longevity and security of any corporation. But they require a substantial amount of a paralegal’s time to manage.

Corporations typically measure employee performance by their contributions to the growth of the business entity. When paralegals are inundated with piles of clerical and administrative paperwork, it limits their ability to make those contributions. In some instances, the disconnect between corporate expectations and the day to day workload can cause paralegal burnout.

Why corporate paralegals need entity management software

Entity management software assists legal professionals with the management of corporate data, enterprise security, and especially clerical or administrative work. Legal entity management solutions protect sensitive corporate data, automate repetitive legal department tasks, and help all legal professionals become more efficient and productive.

Paralegals are the primary beneficiaries of entity management software. Here are four of the main reasons why corporate paralegals need legal entity management technology to improve their own workflows and make greater contributions to the future of the corporation.

Streamline the filing and management of corporate records

A paralegal’s most time consuming responsibilities involve the filing and management of corporate entity records. It involves repetitive data entry tasks that are important for the business, but they’re very time consuming for paralegals.

Entity management technology helps automate these workflows. The software includes built-in templates for minute book records, enabling paralegals to simply input data into pre-assembled fields rather than create the records from scratch.

It’s a far more efficient way to complete essential corporate entity responsibilities. Paralegals can improve their own utilization rates – i.e. the percentage of an eight-hour day spent on growth-generating initiatives – and make greater contributions to the corporation.

The Clio Legal Trends Report is a detailed study showing how corporate entities improve paralegal utilization rates by adopting legal entity management technology into their operations. According to the report, utilization rates have increased an average of 18 percent over the past six years.

Corporations that invest in legal entity management technology understand that every hour of legal work is valuable to the business. Providing paralegals with innovative solutions ensures your corporation gets the most bang for its buck from every member of your legal team.

Create faster and easier ways to acquire signatory approvals

Any legal documentation cannot be finalized without signatory approval from key stakeholders. It’s how corporations maintain transparency and accountability in an effort to promote responsible corporate governance and compliance protocols.

Corporate paralegals typically sit in on important meetings between various corporate executives. They document the key discussion points and summarize the conversation for all stakeholders to review at a later date.

Sometimes, these meetings involve both internal and external stakeholders. This is more common when discussing a merger or acquisition, or a collaborative partnership between one entity and another. Therefore, paralegals must secure signatory sign-off from both their colleagues and external partners.

Entity management software includes built-in e-signature capabilities that allow executives to instantly sign-off on documents. Paralegals can organize, communicate, and finalize records from important executive meetings all within the convenience of the platform. This is a far more efficient and effective way to achieve sign-off on important documents than creating a long thread of back and forth email communications with multiple stakeholders.

Track shareholder activity and accurately report all transactions

Every corporate entity has a board of directors, largely composed of wealthy investors. Every investor takes an ownership stake in the corporation, and their ownership percentage is monitored through the issue and transfer of corporate shares.

Part of a corporation’s compliance program is to accurately and diligently report any shareholder activity to the appropriate regulators. Paralegals are typically tasked with the documentation of shareholder activity, requiring them to update shareholder ledgers with recent transactions that alter the ownership of the corporation.

Traditionally, this process was as tedious as clerical and administrative updates to minute book documents. Paralegals would document new share issues using pen or paper or an Excel spreadsheet and make the appropriate updates as necessary.

Using entity management software, this process becomes far more automated. Entity management technology provides shareholder ledger templates that can be populated with the names, titles, business addresses, and ownership percentages of each shareholder. Any new issue or transfer of shares can be updated in just a few seconds, and the platform intuitively displays the updates in summarized shareholder ledger reports.

It’s faster, easier, and remains in compliance with the laws, so why not make it part of your corporate entity management process?

Reduce legal risk and maintain corporate compliance

Any corporate entity is concerned about its own exposure to legal or financial penalties for non-compliance. Federal regulators are enacting legislation to crack down on non-compliance and white collar crimes, creating greater concerns about risk and disruptions to business.

A large part of any general counsel’s and in-house legal department’s responsibilities is to develop, manage, and oversee a corporate compliance program. Entity management software makes these responsibilities much more efficient for paralegals and their superiors.

Entity management technology has a built-in compliance framework that provides a diligent overview of everything your business entity needs to remain in compliance with the laws. The framework includes things like organizational charts, calendars, workflows, and other templates to monitor for any errors in statutory non-compliance, and date-based compliance tasks.
Your paralegals can use the compliance framework to construct and standardize your corporation’s compliance program. It provides a documented source of truth that all executives, employees, shareholders, and other business partners can use to maintain compliance.

Corporate compliance is a phrase that has made waves in the mainstream media over the past several months. Legal professionals that represent law firms or in-house corporate counsel have always understood the importance of corporate compliance. The phrase has become more common in non-legal settings ever since the collapse of cryptocurrency exchange FTX.

The charges levelled against former FTX CEO Sam Bankfam-Fried include several counts of fraud that could see the 31-year-old face several years in prison. Nestled within the indictments are statements about the lack of organizational hierarchy within the FTX ecosystem. Prosecutors allege that FTX was devoid of structured leadership, organizational charts, and ownership charts for the deliberate purpose of allowing SBF to misappropriate client funds.

What’s the purpose of organization charts and ownership charts?

Corporate compliance refers to a series of laws, regulations, and standards that apply to corporations and the industries from which they operate. Compliance as a practice includes the internal policies and procedures to comply with federal and provincial/state laws that mitigate risks of fraud or other illicit activities.

Organizational and ownership charts help corporations abide by jurisdictional laws. They also shed more light on corporate transparency.

Organization charts inform key business decisions that include things like mergers or acquisitions, tax liabilities or, yes, corporate regulatory compliance in certain jurisdictions. In-house counsel can also use organization charts to connect with the appropriate executives regarding those key decisions. The charts even enable external auditors or regulators to connect with the appropriate party to discuss any compliance issues with the organization.

Ownership charts serve a similar function. They break down what percentage of the company is owned by each shareholder. The charts also distinguish preferred shareholders from common shareholders, and they can also summarize the voting rights (if any) awarded to each owner. They allow key votes regarding the future of the organization to proceed in a structured and organized manner.

Why organization charts and ownership charts matter

The FTX case is a perfect real-world example of why organization charts and ownership charts matter. The lack of corporate governance meant no internal executives were monitoring the flow of cash in and out of the FTX exchange. SBF allegedly used this haphazard organizational structure to defy corporate compliance policies. According to the indictments, he fraudulently used money from customer accounts to finance FTX’s sister company, Alameda Research, his trading firm.

Another great example is a fictionalized account of non-compliance. Fans of the Sopranos will know that the character of Tony Soprano was a silent partner in a garbage collection firm called Barone Sanitation. He used the legitimate business as a front to launder profits from his illegal businesses. The money was later returned to Soprano in the form of a paid salary from Barone Sanitation, hiding his ill-gotten gains from federal scrutiny.

While many corporate executives legitimately operate their businesses, there are bad actors out there (in real-life and on TV) who will manipulate companies that fail to abide by the rules of corporate governance. organization charts and ownership charts maintain accountability and transparency across the organization to prevent bad actors from implicating entire business entities in criminal activity. Internal counsel and external regulators can use these charts to enforce good corporate compliance and governance throughout the entire entity.