Although the benefits of having a corporation are numerous (such as limited liability and tax planning), these benefits come with obligations, not the least of which is proper record-keeping.
One of the most common problems we see in our practice is a failure to keep the necessary records on a timely basis. These failures usually come to light during or before an audit (such as corporate tax), in the course of a transaction (such as a financing or sale) or when there is an internal dispute (such as between shareholders). When these failures come to light, it is usually far more costly to “recreate” the necessary records than it would have been to create them along the way. In some circumstances, it can become impossible to recreate the necessary records, such as when one of the principals is no longer available, perhaps due to death or disappearance.
A good starting point is keeping on top of regular annual business. In order to comply with most corporate legislation, the directors of a corporation must call an annual meeting of the shareholders of the corporation. Although the timelines differ slightly by jurisdiction, in Ontario, the annual meeting must be held within 18 months following the corporation’s date of incorporation and thereafter within 15 months following the previous annual meeting, but not later than six (6) months after the end of the corporation’s preceding financial year.
Before an annual meeting of shareholders can be held, the directors must approve the financial statements for submission to the shareholders. It is also a good idea to have directors confirm shareholder loans and deal with any other changes. At the meeting of shareholders, the shareholders should re-elect directors and confirm the accountant/auditor. After the shareholder meeting, the new board should re-appoint officers for the ensuing year.
The corporate legislation also provides that the Corporation must have its financial statements audited unless the shareholders consent in writing to an exemption for a particular year.
In addition, bonuses and dividends must be passed by resolutions of the board of directors in order to be valid.
We can provide minutes of meetings or written resolutions dealing with all of the matters required to be covered by a Corporation on an annual basis. Moreover, we have three plans for doing so:
- No Plan – Without an annual plan, we generally charge $249 for preparing annual resolutions and $50 for each resolution pertaining to bonuses or dividends
- Regular Annual Plan – Under our regular annual plan, clients pre-pay $249 at the start of each year, which covers all of the annual business, bonuses and dividends for one fiscal year.
- Ultimate Annual Plan – Under our ultimate annual plan, clients pre-pay $399 at the start of each year, which covers all of the annual business, bonuses and dividends for one fiscal year, like our regular annual plan, but also includes all of the following for that fiscal year (any disbursements, like filing fees, are extra):
- Changes in directors or number of directors;
- Changes in officers or titles;
- Changes in registered office;
- Notice of change re changes in registered office, officers or directors;
- Changes in by-laws;
- Amendments to articles (not related to transactions);
- Business name registrations and renewals;
- PPSA renewals and notices for security in favour of principals;
- Renewals of certificates of authorization for professional corporations;
- Legal advice related to any of the foregoing; and
- Online access to all minute book documents.
For clients with multiple corporations, we offer a 5% discount on the ultimate annual plan for each corporation to a limit of $100. In other words, if you have 4 corporations, each corporation will enjoy an $80 discount.
If you are interested in subscribing to one of our annual plans, please give us a call.