- by Stacey Jessiman -
Maintaining an accurate corporate Records Book is crucial for several reasons:
1. Avoiding legal and regulatory compliance problems:
Corporations and societies are typically obligated by legislation to maintain various records, including bylaws or articles of incorporation, registers of directors and corporation shareholders or society members, and their meeting minutes and resolutions, annual reports, and other important documents. In BC, for example, the rules relating to corporation and society records-keeping are set out in the Business Corporations Act and Societies Act, respectively. Failing to maintain accurate records can result in legal and regulatory consequences.
2. Good Corporate Governance: Accurate record-keeping is fundamental to good corporate governance. It ensures transparency, accountability, and the proper documentation of decision-making processes. Corporate records provide evidence of important actions, transactions, and resolutions, allowing stakeholders to understand how the corporation or society has been managed.
3. Protection of Directors and Officers: Maintaining accurate records can help protect directors and officers by providing evidence they have complied with legal requirements and followed good corporate governance practices. In the event of a legal dispute or regulatory investigation, having well-maintained records can demonstrate that directors and officers acted diligently, in good faith, and in the best interests of the company or society. And, having a complete record of their valid appointment can prove important for insurance purposes and if their decisions are challenged in court (read more about this here).
4. Shareholder / Stakeholder Confidence: Accurate and well-organized corporate records inspire confidence among shareholders/members and potential investors or donors. They demonstrate that the company is managed professionally and in accordance with applicable laws and regulations. Proper record-keeping contributes to transparency and can enhance shareholder/member and stakeholder trust and engagement.
5. Due Diligence and Transactions: Accurate corporate records are essential for conducting due diligence and facilitating various corporate transactions such as mergers, acquisitions, and financings. Potential investors, buyers, or partners typically review corporate records to evaluate the organization’s legal and financial standing.
Overall, maintaining an accurate corporate Records Book is crucial for legal compliance, effective corporate governance, protection of directors and officers, shareholder/member and stakeholder confidence, and facilitating business transactions. If you need assistance analyzing whether your corporate records are properly maintained and up to date, contact Stacey Jessiman at firstname.lastname@example.org