By-laws are rules that govern the internal operations of a corporation. For example, you might want to set some rules for your corporation that are not dealt with in the Business Corporations Act (BCA). You also might want to modify some of the rules that are in the BCA, as long as those changes are permitted by the Act. Some model by-laws can help you with content and wording.
Among other things, your by-laws can:
- set the date of your corporation’s financial year-end
- make banking arrangements
- address the appointments, qualifications, and duties of officers
- delegate the responsibility for setting the salaries of directors and officers
- establish the salaries or other remuneration of directors and officers
- set down the procedures for calling and conducting directors’ and shareholders’ meetings
- establish the minimum number of people required at directors’ and shareholders’ meetings to establish a quorum (that is, enough people to make binding decisions)
- make rules limiting the modifications that can be made to the powers given to corporate directors under the CBCA (for ex., the by-laws could make all share issuances subject to shareholder approval).
Unless your corporation’s by-laws state otherwise, the directors have the power to make, repeal and amend the by-laws. Every new by-law and any by-law change (including the repeal of a by-law) require shareholder approval at the first regular meeting of shareholders after the directors have passed the new or amended by-law. The effective date of a by-law is the date it is passed by the directors, not the date of approval by shareholders.
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Why Your Company Needs a Corporate Minute Book?
- Maintaining a minute book is required by law for all corporations in Canada.
- It’s required by the Canada Revenue Agency (CRA)
- Failure to comply with this obligation can lead to fines of $25,000
- Helps to protect your corporate status
- Failing to maintain adequate corporate records exposes your corporation to serious risks
- Failing to keep corporate records can result in the loss of shareholders and directors’ protection of personal assets.