Outdated or incomplete corporate minute books in Canada can trigger statutory fines and even imprisonment, and they also increase the risk of CRA penalties, audits, and corporate dissolution. The exact penalties depend on the statute (federal vs provincial) and the specific record-keeping failure, but they can be significant for the corporation, directors, officers, and sometimes shareholders.
Statutory offences and fines
- Under the CBCA, failing to maintain required corporate records (including minutes and registers) is an offence that can attract fines of up to 200,000 and imprisonment up to six months, or both, for individuals in certain cases (for example, around the register of individuals with significant control).
- In Ontario, inaccurate or incomplete minute book records can amount to a “misrepresentation” under s. 256 of the OBCA, exposing persons to fines up to 2,000 and up to one year in jail, and corporations to fines up to 25,000.
CRA-related penalties and tax risk
- CRA treats inadequate books and records as a compliance issue and may prosecute where records (including corporate minutes) are not maintained as required; on summary conviction, a taxpayer can face a fine of at least 1,000 and possible imprisonment, in addition to normal tax penalties and interest.
- Poor or outdated minute books make it easier for CRA to deny the validity of dividends, bonuses, or reorganizations, which can lead to reassessments, additional tax, penalties, and heightened audit risk.
Corporate status and dissolution
- Several corporate law sources note that persistent non-compliance with record-keeping obligations can lead to administrative actions such as deregistration or involuntary dissolution of the corporation.
- Once dissolved for non-compliance, the corporation can lose limited liability protection and may need costly court or administrative steps to revive and correct its records.
Personal exposure of directors and officers
- Directors and officers who knowingly authorize, permit, or acquiesce in false, misleading, or incomplete corporate records (including beneficial ownership registers) can face personal fines of up to 200,000 and up to six months in jail under CBCA-related rules.
- Shareholders who refuse to provide information needed to maintain required registers can also be personally liable for similar fines and potential imprisonment.
Practical (non-statutory) consequences
- An outdated minute book commonly leads to: CRA audits, delays with banks and regulators, higher legal and accounting fees, and difficulties closing financings or sales.
- During due diligence for a sale or investment, missing or inconsistent minutes and registers often translate into price reductions, holdbacks, or even deal
Need help bringing your corporate minute book up to date? Contact the team at Welsh Law to discuss your corporate governance needs and ensure your records meet all legal requirements.