Both the Business Corporations Act of Ontario and the Canada Business Corporations Act (the “CBCA”) impose various requirements on corporations to maintain certain types of documents and records. This post examines the obligations and associated legal risks of failing to ensure their accuracy.
What Are “Corporate Records”?
The phrase “corporate records” is often used colloquially to refer to records documenting a company’s corporate and operational activities.
In Glass v. 618717 Ontario Inc., the Superior Court of Justice (Commercial List) commented on the vital role that corporate records play in the corporate world. It noted that such records identify “the owners, directors and officers of the corporation,” record essential decisions made by those who run the company, and provide “a reliable source of information for outsiders dealing with the corporation, whether financial institutions lending money to the company or government tax agencies seeking to ensure that the corporation remits the taxes it is obliged to pay.”
Aside from the practical importance played by corporate records, the Business Corporations Act imposes legal duties on companies with respect to such records (see, for example, Part XI of that statute and Part IV of the CBCA). As the Court commented in Glass, the Business Corporations Act “re-inforces the importance of accurate corporate records by requiring companies to prepare and maintain records containing the company’s articles, by-laws, unanimous shareholder agreements, minutes of meetings and resolutions of directors and shareholders, a register of directors, and a securities register showing the names of all shareholders and all transfers of securities.”
Corporate records are also essential for regulatory audits and for performing due diligence in corporate transactions, such as financing arrangements or mergers and acquisitions (M&A).
Statutory Requirements to Ensure the Accuracy of Corporate Records
Aside from the specific types of records that must be maintained, the Business Corporations Act contains provisions addressing the accuracy and safeguarding of such records.
In Glass, the Court commented that section 139 of the statute “requires a corporation to take adequate precautions, appropriate to the means used, for guarding against the risk of falsifying the information recorded.” The statute also prohibits anyone from recording (or assisting in recording) information in such a record where they know it is not true. Likewise, the statute contains a prohibition against making information that purports to be accurate available in a record where the person doing so knows it is not true.
What Happens if Corporate Records Contain an Error?
As the Court in Glass commented, because of the statutory obligations mentioned above, “it is not surprising that the [Business Corporations Act] creates a very strong presumption that the information recorded in a minute book is proof of the facts stated therein.” This presumption is found in section 139(3) of the statute. Pursuant to that section, the information in such a record is admissible into evidence “as proof, in the absence of evidence to the contrary, of all facts stated” therein. In other words, as the Court pointed out in Glass, the statute implicitly recognizes that corporate records may not be accurate “for a variety of reasons.”
The question then becomes how the presumption of accuracy can be rebutted.
Rebutting the Presumption of Accuracy of Corporate Records
The 2025 case of Dhaliwal v. Cheema addresses this particular topic. The case involved a dispute between four brothers and their brothers-in-law regarding a highly successful trucking business operated through multiple private companies. After a dispute arose between them, the parties sought various remedies, including a court declaration confirming the shareholdings of certain of the companies. It was alleged by the brothers-in-law and one of the brothers that the share registers of some of the companies did not accurately reflect their interests in those companies.
The Superior Court of Justice (Commercial List) began its consideration of this issue by examining whether equity contributions had been made to the companies by those claiming an interest that was not reflected in the share registers. Specifically, the Court noted that the trucking business had been established through a company whose share register showed that it was entirely owned by the brother who had incorporated the company in 2003. However, the evidence showed that the other brother and brothers-in-law had contributed cash and trucks to the business when they joined. The Court noted that no plausible explanation had been put forward “for why they would have made these contributions if not for the beneficial ownership interests that they claimed to have.” As such, the Court found that each of the four individuals had an “equal beneficial interest” in that particular business.
The Court went on to outline the law applicable to rebutting the presumption that the corporate records accurately reflected share ownership. It referenced the decision in Glass and, in particular, that decision’s review of the types of evidence found to be sufficient to displace the presumption. In particular, the Court noted two such cases: in the first, there had been evidence that no money had been received from “any of the original subscribing shareholders for their treasury shares” (see Dunham and Apollo Tours Ltd. (No. 1)), and in the second, evidence showed a minute book had been reconstructed and contained “fabricated documents” (see Beaudry c. 9050-8151 Quebec Inc.).
Conduct of Parties Also Considered When Identifying Business Interests
The Court also noted previous cases in which the evidence had been found insufficient to rebut the presumption. Those instances included a case where evidence showed adequate consideration had been paid for shares, even if the amount shown as paid in the corporation’s financial statements was incorrect (see Hermans v. Three County Recycling & Composting Inc.); and a case where, while there was evidence someone would own shares, there was no record that they had been a shareholder and their behaviour was equally consistent with other explanations (see Anor Management Ltd. c. Brooklo Industries Ltd.).
The Court in Dhaliwal further noted that it was permitted to look at the conduct of the parties “over the years” for the purpose of considering the issue of whether the presumption with respect to the corporate records was rebutted. It observed that each case was “fact specific.”
The Court ultimately found that, because the brother and brothers-in-law had established their beneficial interests from the beginning, “those interests can be maintained even if they are not reflected in the corporate records.” It concluded that there was an “unwritten agreement” between the four men that they would continue to be equal beneficial owners of the primary company and its business, and that this rebutted the presumption of the accuracy of the contents of the minute book and share register. Among other things, the Court noted evidence of capital contributions that had been both “cash and in kind” when they had joined the business, a “willingness to provide guarantees of indebtedness and make arrangements for injections of funds when required (even if repaid),” responsibilities in the business that went beyond those of mere employees, the payment to them of dividends and their use of “shareholder accounts.”
Contact Bader Law for Forward-Thinking Business Law Services in Mississauga & Oakville
Maintaining accurate corporate records is not a mere administrative formality; it is a legal obligation with real consequences. If you are unsure whether your corporation’s minute book, share registers, or governance records comply with Ontario or federal requirements, experienced legal advice can help prevent costly disputes. The business law team at Bader Law regularly assists corporations, shareholders, and directors with corporate recordkeeping, rectification, and governance issues. Contact us online or call (289) 652-9092 to discuss how we can help protect your business and ensure your records accurately reflect reality.