In the digital era, physical minute books are gradually becoming obsolete. The legislative framework now allows corporations to keep their books and records electronically, but certain elements deserve attention before the transition.
The context
In the digital era, physical minute books are increasingly outdated, while electronic books are gradually becoming the norm. Physical books have several disadvantages: they take up a lot of space, they can be lost or destroyed without a copy, and they are difficult to share (with one's accountant or attorney, for example).
The legislative framework has changed over the past decades to legally allow companies to keep their corporate books and records electronically. In this regard, here are some elements to consider.
Share certificates
Companies governed by the Quebec Business Corporations Act cannot legally issue electronic share certificates. The provincial law clearly indicates that a share certificate must be on paper.
Therefore, when a digital company book is created, if it contains electronic certificates, they are technically invalid. The consequences of such an irregularity can be significant. One can reasonably question whether, for example, endorsing a share certificate to transfer shares is valid if the certificate itself is invalid.
When a minute book is created electronically for a provincial corporation, the shares should normally be issued without a certificate, as permitted by Quebec law. If electronic certificates have already been issued, they should be regularized by printing the certificates on paper, or by converting the shares into shares without a certificate.
For federal corporations, nothing prevents the certificates from being electronic. Canadian law is silent on this point, so Quebec common law in principle allows certificates to be electronic (see the Act to establish a legal framework for information technology).
"For a provincial corporation, a share certificate must be on paper. An electronic certificate is technically invalid."
Storage medium for documents
A company with electronic corporate books and records must choose a medium on which to store these documents. Subscriptions to specialized platforms exist for this purpose.
However, this is not required, and documents can be kept in a cloud service, or even on a simple computer hard drive. The cloud has the advantage of allowing access to documents from any computer, and makes sharing documents simpler.
One or multiple files
It is common to see company books in a single PDF file. The goal of such a format is to try to replicate the physical minute book and its various tabs. In reality, the book (which is actually several books and registers) can be split into different files and folders, for example one folder for the company's articles, another folder for resolutions in chronological order.
A minute book kept in a single file has the disadvantage that it is complicated to modify when it comes time to add resolutions or update registers. In addition, when the file becomes large, finding a specific document can take time: you have to scroll through all the articles, by-laws and resolutions to find a specific resolution.
A specific question? Book 15 min with your lawyer
It's free.