The directors of the corporation must hold an
organization meeting. The meeting can be called by an incorporator or a director and it is
recommended that it be held as soon as possible. Each director must be notified in writing
in advance of the date, time and place of the meeting.
At this meeting, the directors are typically
required to issue at least one share and they can also perform the following:
- make general by-laws;
- appoint officers;
- adopt banking arrangements;
- adopt a corporate seal, if necessary;
- set the fiscal year; and
- approve the form of the share certificate for each class of share.
The general by-laws
of the corporation govern the day-to-day activities of the corporation. The by-laws vary
depending upon the corporation, but in general they deal with matters such as the registered
office, corporate seal, fiscal year, authority to dispose of securities, borrowing powers and
general information concerning the officers, directors, shareholders meetings, transfer of
shares, payment of dividends, loans and notice requirements. The by-laws must be ratified
by a resolution of the board of directors. As soon as the resolution is adopted, the by-laws
come into effect.
The by-laws (with the exception of the various
provisions relating to the agents, officers and servants of the corporation) will only have
effect until the next annual shareholders meeting of the corporation, unless they are ratified
in the meantime by a general meeting of the corporation. If the by-laws are not confirmed at
the annual meeting, they will cease to have effect from that date.
Shareholders only have the option to ratify or
not to ratify the by-laws adopted by the board of directors. The shareholders cannot repeal,
amend or modify the by-laws in any way since this is in the sole discretion of the directors.
the officers, who are in turn responsible for managing the day to day affairs of the corporation.
An officer can also be a director of the corporation
and he/she can be paid a salary for the work he/she does as an officer.
Adopt Banking Arrangements
fact that the general by-laws include rules regarding the execution of documents and the borrowing
of money by the corporation, a specific banking by-law and banking resolution must be adopted by
the board of directors by way of a resolution. The resolutions should be adopted at the time of
organization in order to enable certain officers to sign on behalf of the corporation. In most
cases, the president alone or the president and the secretary are given this authority. The banking
resolution and by-law can vary depending upon the needs of the specific corporation involved.
Nevertheless, each financial institution has its own pre-printed resolution and by-law which
are sufficient in most cases.
A certified copy of both the borrowing by-law and
the banking resolution must be delivered to the financial institution with which the corporation
will do business.
Adopt a Corporate Seal
A corporation is not
obliged to adopt a corporate seal since no document is ever said to be invalid simply because a
corporate seal is not affixed to it. If, however, a corporation decides to adopt a corporate seal,
the directors must indicate their approval in a resolution.
Set the Fiscal Year
A corporation is free
to choose any date as the end of its fiscal year. Regardless of the year end that a corporation
chooses, every corporation must file its annual filing with the relevant government body or
department within the prescribed dates.
Approve the Form of the Share Certificates
A sample of each share certificate to be used for each class of share is prepared, the word "specimen"
is printed on its face and the certificate is inserted into the corporation's minute book. The
directors must then approve the form of the share certificates in a resolution.
A corporation is required
to keep a book at its registered office which contains the following information:
- its articles, by-laws, unanimous shareholders agreement or any written
agreement by a sole shareholder restricting the powers of the directors;
- minutes of meetings and resolutions of the shareholders;
- full name of each director and the date on which the term of office of
each director begins and ends;
- minutes of meetings and resolutions of the board of directors and the
- names in alphabetical order and last known addresses of persons who were
or are presently shareholders;
- number of shares held by these persons;
- date and details of the share issue and transfer of each share; and
- amount due on each share, if any.
The shareholders, but not the creditors, can consult
the entire book with the exception of the information relating to the board of directors and the
executive committee meetings and resolutions. Only the directors and auditors have access to this
information, unless the shareholders acquire this right from the directors as a result of a
unanimous shareholders agreement. Shareholders are also entitled to obtain from the board of
directors, free of charge, a copy of the corporation's Articles of Incorporation, by-laws and
any unanimous shareholders agreement.
Once the corporation
has been organized, the various registers found in the corporation's minute book must be completed.
This lists the names of
all the directors along with their addresses, the date on which they became a director and the date
on which they ceased to be one.
Entered in this register
is the name and address of every person who holds shares in the corporation, along with the date on
which they became a shareholder and the date on which they ceased to be one.
This lists in alphabetical
order the name and address of each shareholder for each class of shares, along with the date on
which the shares were purchased, the share certificate number, the price paid for each share, the
total amount paid and the aggregate number of shares held by each shareholder.
Share Transfer Register
Entered in this
register are all stock transfers that have taken place over time, including the number and date
of the transfer, the name of the transferor and transferee, the number of shares transferred and
both the certificate number that was cancelled and issued.