Once a corporation is formed, the work does not stop at incorporation. A corporation must be properly maintained and documented over time. This ongoing maintenance is often referred to as corporate hygiene.
Corporate hygiene refers to keeping the company’s legal records, governance documents, and corporate filings accurate and up to date. Proper corporate hygiene helps ensure the company remains compliant with legal requirements and reduces risks during audits, financing, or when selling the business.
For childcare operators, maintaining proper corporate records is especially important because the business may interact with banks, landlords, government programs, and regulators.
Corporate Record Keeping #
A corporation must maintain proper records of its activities and decisions.
These records are typically kept in the corporate minute book, which serves as the official legal record of the company.
Important records may include:
- Articles of Incorporation
- Corporate bylaws
- Shareholder registers
- Director registers
- Share certificates
- Board resolutions
- Meeting minutes
Keeping these records organized ensures that the corporation can demonstrate proper governance and compliance when needed.
Contract Documentation #
Businesses regularly enter into contracts with various parties, such as:
- Landlords
- Suppliers
- Staff members
- Service providers
- Government agencies
These contracts should be properly documented and stored as part of the company’s records.
Organizing contracts in a clear and accessible system helps the company track important details such as:
- Lease terms
- Renewal deadlines
- Payment obligations
- Legal responsibilities
Good contract management is part of maintaining strong corporate hygiene.
Board of Directors Meetings #
Corporations are expected to hold board of directors meetings periodically to review and approve important decisions. Even if the company has only one owner and one director, it is still good practice to formally record decisions through written resolutions.
Examples of decisions that may require board approval include:
- Opening a bank account
- Signing major contracts
- Approving loans
- Issuing new shares
- Appointing officers
Recording these decisions in the corporate records helps maintain proper governance.
Changes to the Corporation #
Over time, information about the company may change. These changes should be properly documented and updated.
Common changes include:
- Change of business address
- Appointment or removal of directors
- Appointment or removal of officers
- Changes to ownership or share structure
When these changes occur, the company may need to:
- Update government records
- Prepare director or shareholder resolutions
- Update the corporate minute book
Keeping these changes properly documented ensures that official records accurately reflect the current structure of the company.
Moving the Business #
If the company changes its registered office address, this change must be updated in the company’s official records. Depending on the jurisdiction, the company may also need to file an update with the government registry so that the official corporate record reflects the new address. The corporate minute book should also include documentation approving the change of address.
Changes in Directors or Officers #
If a director or officer resigns or a new one is appointed, the company must document the change.
This typically involves:
- Preparing a director or shareholder resolution
- Updating the director or officer register
- Updating government filings if required
These changes should also be recorded in the corporate minute book.
Updating the Minute Book #
The corporate minute book should be updated whenever important corporate events occur.
Examples include:
- Issuing or transferring shares
- Appointing or removing directors
- Changing the registered office address
- Major corporate decisions approved by the board
While some small businesses may not update their minute books regularly, keeping it current is very important. When companies seek financing, government approvals, or when selling the business, lawyers and buyers will often review the minute book to confirm that the company has been properly maintained.
Key Takeaway #
Corporate hygiene is an important but often overlooked aspect of running a business. Maintaining accurate records, updating the minute book, and documenting corporate decisions helps ensure that the company remains legally compliant and well organized.
Good corporate hygiene becomes especially important when the company is seeking financing, bringing in partners, or preparing for a future sale, as proper documentation helps demonstrate that the business has been responsibly managed.
