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Corporate Law Services.
Our corporate law services include the following:
- acting as registered office and records address for the corporation;
- filing notices re changes of shareholders and directors with the applicable corporate registries office as and when required;
- filing the corporation’s annual return; and
- preparing annual director and shareholder resolutions as required by law and forwarding them to the directors and shareholders for electronic signature and placement in the corporate minute book;
Why appoint a law firm as the registered office?
A registered office can be any address within the incorporating jurisdiction that is open during regular business hours, however, most corporations choose to have a corporation act as the registered office. There are a number of reasons for this, including the following:
- some business owners do not have an office that’s open during regular business hours or would prefer not to list their home address publicly;
- if legal documents are served upon the corporation at the registered office (which is typically the case), a law firm can often take steps to delay any further proceedings until such time as instructions can be obtained from the corporation. This can prevent the corporation from losing the claim by default for failing to file a response in time;
- if a law firm acts as the registered office, it typically also arranges to file the corporation’s annual corporate return with the applicable corporate registries office when due. Failure to file on time can lead to the corporation be struck from the corporate registry.
Why name a law firm as the records address?
It’s common for corporations to appoint a law firm to act as the records address of a corporation as well as the registered office. There are a number of reasons for this:
- some business owners do not have an office that is open during regular business hours, or would prefer not to list their home address publicly;
- a law firm provides a secure location where records can be kept in a safe and reliable manner;
- a law firm can forward records to bankers, accountants and other professionals as necessary from time to time;
- a law firm is capable of restricting and monitoring access to corporate records by third parties as required by law; and
- if the law firm is also preparing annual minutes and filing annual returns, they can easily keep the corporation’s minute book up to date as required by law.
Why is it important to pass annual resolutions?
Corporations are required by law to hold annual meetings of the shareholders (or pass written resolutions instead), and to keep the corporation’s records up to date. Besides ensuring that the corporation complies with the law, here are a few other other reasons why it’s important to pass annual resolutions of the directors and shareholders and keep a corporation’s minute book up to date:
- by law, the shareholders of a corporation (whether they hold voting or non-voting shares), are entitled to receive audited financial statements of the corporation each and every year. Obtaining audited financial statements can be a significant expense for a small private corporation, and most small business owners believe that the additional protection provided by the formal audit is not worth the extra expense. If this requirement is not waived in writing by the shareholders EACH YEAR, a shareholder could claim at a later date that the financial statements of the corporation should have been audited, rather than provided on a less stringent Notice to Reader or other review basis. This means that the corporation may be required to go back and have it’s financial statements audited for several years (which could easily cost tens of thousands of dollars). We’ve witnessed this being used by disgruntled shareholders as a negotiation tactic on several occasions. This issue can be easily avoided by passing appropriate resolutions of the shareholders each year, and providing that each shareholder waives the requirement for audited financial statements;
- In some jurisdictions, directors of a corporation are limited to serving for a limited number of years unless re-appointed by the shareholders. Re-appointing and confirming the directors in each year is a prudent step to ensure that the directors of the corporation are properly appointed and have the authority to bind the corporation;
- a corporation’s minute book is something that banks, investors and purchasers of shares of the corporation will likely want to review prior to agreeing to any transaction. Having an incomplete minute book is often a sign that the corporation has not taken care of important details and may result in a bank, investor or purchaser backing away from a potential deal;
- by law, the financial statements of the corporation need to be approved each year. Having written resolutions to this effect protects against shareholders claiming that they didn’t receive or approve the financial statements;
- it may not be possible to obtain the necessary signatures at a later date due to a shareholder or director’s death, incapacity, or dispute with the corporation, making it impossible to bring the corporation’s records up to date and in compliance with the law;
- requiring shareholders and directors to approve decisions of the corporation on a yearly basis gives them the opportunity to raise any issues or concerns they may have with the business and the way it’s operated. In our experience, it’s best to address those issues or potential issues head on, rather than letting them fester and grow into a bigger problem.
Our corporate law services (which are included for one year with our ALL IN incorporation package), include preparing annual resolutions of the directors and shareholders of the corporation.
Full details of our corporate law services will be contained in a Registered Office Agreement to be signed at the time of incorporation.
If you’d like more information about our corporate law services please contact a business lawyer with Twin River Law LLP.
This article contains general information, NOT LEGAL ADVICE.
If you’d like legal advice from a lawyer, incorporate with us or contact a lawyer with Twin River Law LLP to request a consultation.