Corporation Minute Books - Do I need one when Incorporating?

As a lawyer dealing with small business owners that are starting-up a business on a shoe string budget - Do I really need to have a corporate minute book?

The answer is simple: yes - it is required by law; and no it does not have to be a binder.

Most Canadian laws do not specifically mention a “minute book” but rather of keeping records of specific kinds of information. Most jurisdictions in Canada require corporations, and therefore its directors, to keep records containing the articles and by-laws and any amendments, minutes of meetings and resolutions of shareholders and directors, copies of all notices of change of directors, and securities registers.

Accordingly, it is legally required to maintain these records and information in one place. These records are kept in a “Minute Book” which has the properly named sections and tabs of the records required to keep. Moreover, the maintenance and keeping up to date of the minute book ensures easy access to the desired information especially if there have been many changes over the years. As you grow your business more documents will be inserted in same.

Green Light for Organics Part III

The Price and Profit Factors: Status Matters

Even with a lack of real evidence of its superiority, people do pay more for organic produce, mainly because they believe it to be healthier as well as tastier than its counterpart. Depending on various factors, the prices can be on par with conventional produce and go up to 30% higher.

Because of the regulation/certification, lower production volumes and the fact that fewer organic products are mass produced, the price of organic can be higher. But the increase in demand recently for these products has caused greater production, thus driving down the price. Retailer Shaskin says that organic strawberries, for example go for almost the same price as the conventional ones, and that even though some organics will stay higher, many types of organic products will go down in price in the future.

Ontario-based organic wine producer Martin Malivoire believes the prices will even out and conventional food producers will find their market to be less profitable as the costs for pesticides and other conventional growth methods go up. "It will become a healthier world out of necessity because we won't be able to expend the energy and organic foods will actually be the cheaper choice," he said.

Malivoire's critically acclaimed wines are seeing an increase in sales in Ontario so his company is expanding production as well as distribution to Quebec and Alberta, among other new markets. He feels that the labeling claims no small part in his success. Though his grapes were always organic, he got the official accreditation in 2004 as he saw it made a difference to his consumers. And now he sees that his products are believed to be of higher quality for that reason.

Though he has been advised to raise prices due to his organic status he chooses not to at this point. “I think the impact is those that are not organic are going to have to reduce their prices in order to compete with us," Malivoire says.

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Ontario or Canadian Incorporation - Where to incorporate?

We often get this question - I am based in Ontario and want to incorporate my business but don’t know if I should incorporate a Federal or Ontario corporation – where should I incorporate?

Deciding where to incorporate involves many factors including evaluating corporate and tax laws. A competent lawyer/accountant should be consulted to evaluate your specific circumstances. However, for most small corporations the following factors make Federal (Canada) corporations more attractive - read below. You can also check out this video about incorporations for more information.

Federal corporations have lower government incorporation fees than Ontario corporations ($200 versus $360). Also, although Federal corporations must register extra-provincially with the Ontario government, there is no government fee for this registration.

Federal corporations have the most stringent criteria in granting the right to use a corporate name. Ontario corporations (like most other provinces) offer very little protection of use, and will grant almost any name provided it is not identical. Moreover, if there is any protection, it is limited to that province, unlike federal corporations which afford Canada wide protection.

Federal corporations require that 25% of its directors be resident Canadians, while Ontario corporations require 51% be resident Canadians. This may be advantageous if you have foreigners involved in your business.

Delays for both are approximately the same where Certificates of Incorporation can generally be obtained within 2 working days or less.

However, Federal corporations must file annual reports at a cost of $20 per year whereas Ontario corporations’ annual reports are free.

You can check out our pre-incorporation checklist for Ontario incorporations. For a more detailed answer check out this link about where to incorporate in Canada.

Green Light for Organics Part II

Questionable Standards Until Now for Canada

Despite that proper accreditation for organic products has existed in Europe and the U.S. for several years; until recently Canadian organic products could receive such a title even based on the manufacturer using organic hand soap. There has only been voluntary certification here until June 30 of this year; when the labeling standards for Canadian organic products became enforceable by law.

According to Michael Saumur of the Canada Organic Office at the Canadian Food Inspection Agency, those companies claiming to be organic on their labels that don't act on a warning to comply with the laws are subject to their products being removed from stores or face prosecution. These laws include a requirement for a product to contain at least 70% organic ingredients to be called “organic”. There will also be a specific logo for products that are over 95% organic. Those products that are between 70% and 95% organic can state their percentage on the packaging.

Though the laws may be inconvenient to implement at first, Denise Shaskin of Planet Organic Market believes they will ultimately benefit the organic industry. Now the competition in the industry can be more fair too, and the new certification is recognized by the U.S., eliminating the need for separate certification in order to export goods. According to a study in the Canada Gazette, the new certification standards could have a net benefit of $752 million for the economy.

In Shaskin's experience, people's main reason to shop for organic goods is due to an illness in their family. So since they often scrutinize the contents of a product for health concerns, she believes the certification standards will boost many consumers' confidence in the contents of the packages they buy.

Shaskin, recognizing the increasing demand for organic products in the marketplace, entered this market in 1993 and started the Planet Organic chain in 2001. She claims that annual sales jumped to $113 million last year from only $2 million for her retail chain that operates throughout Canada now and intends to expand further into Ontario and Alberta.

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Green Light for Organics Part I

Topping the Pizza

Matthew Von Teichman's wife was expecting, and in a move to introduce a more healthy lifestyle she decided to buy an organic pizza for their supper. They were both largely unimpressed. But this spurred Mr. Teichman, the experienced entrepreneur, onto a new venture to offer people a good range of more than palatable organic food products. Life Choices Natural Foods, which now has expanded across Canada and the U.S., was born.

Now sporting nine product lines that are certified organic, featuring breaded chicken, mac and cheese and the newest one, multigrain perogies; their first product offer was indeed pizza.

Von Teichman notes the organic industry's explosive sales growth rate of 20% recently, compared to that of most non-organic products that only goes up by 1 or 2% per year. This can be attributed to consumers' greater awareness of health-related issues as well as improved access to research on organic science via the internet. Von Teichman sees the interest as being due to people's demand for nutritious foods and their demanding to avoid dangerous substances like chemical residues. The main selling points of organic products, including food, health-care products and vitamins are that they are generally not genetically modified and they don't contain antibiotics, herbicides, hormones, insecticides or pesticides.

Is Organic Truly Better?

Apparently, there is no definitive proof of organic food being more nutritious or healthier than its non-organic counterpart. According to Professor Rena Mendelson of Ryerson University who is also chair of the Canadian Council on Food and Nutrition, a variety of farming conditions makes it difficult to pinpoint the nutritional levels or their sources. But she feels that there is a difference in terms of the impact each type of food has on the environment. A reduction in pesticides would make all farming more organic and put those foods ahead of nonorganic produce in that regard.


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Canadian economy not to be outdone – Part II

At the G8 summit, both the U.S. President and British Prime Minister, among others called for additional economic stimuli on a global scale, despite the US$2 trillion already expended as they feel it has yet to push demand high enough. On the contrary, Canadian PM Stephen Harper urged other leaders to focus on ensuring proper delivery of those stimuli already promised. "That's been our focus in Canada and I would encourage the same priority elsewhere," he told the press.

Canada's stimulus package consists of $46 billion over 2 years, poised for creating more jobs and igniting consumer demand. The amount is expected to increase to almost $80 billion once the provincial and territorial aspects kick in. PM Harper claims 80% of the planned federal funds have already been committed. In addition, Bank of Canada cut its key lending rate from 4.5% in December 2007 to its present level of .25%

Analysts see the present Canadian stimulus package taking effect in the next few months and see no need for any new stimulus monies. There is always a lag from the announcement of the stimulus package until effects are seen from it, must like that of lowering interest rates, according to Craig Wright, chief economist at Royal Bank of Canada. "Staying the course is probably the prudent path right now," he says.

Stefane Marion, chief economist at National Bank Financial, agrees that we must wait for the money to start working in the economy. Canada's financial system in general is in better shape than those of most other G8 countries and did not have the same real estate collapse that they did. He also sees production rising this year as indicated by purchasing managers and other key factors.

Furthermore, the IMF advises countries to continue to support their economies in some way until the recovery takes hold (predicted next year); while they should also plan to reduce deficits in their budgets caused by spending to combat the recession.
Canada, along with the IMF in general also agreed to make emergency capital available for borrowing, for countries that may need it soon.

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Canadian economy not to be outdone – Part I

The International Monetary Fund, which released a report at the same time as the G8 summit convened, believes Canada is capable of the most improvement in her economy for 2009 and 2010 compared to almost all industrialized nations. Though some leaders at last week's G8 summit are pushing for more stimulus money, other economic experts don't think they will be necessary in Canada.

Despite expectations of a slight shrinking for the world's economy this year (1.4%), IMF has a positive outlook for the end of the recession in 2010, calling for 2.5% global economic growth next year, up more than .5% from their predictions last April.

Other industrialized countries' economies are expected to decrease by 3.8% this year, in comparison to Canada, only expected to drop by 2.3%. Only .8% growth is predicted for the US for 2010, half that of Canada's forecasted gain of 1.6%, which is only second in line to Japan's 1.7%. India and China, top consumers of Canadian raw materials are seen as leading in growth for 2010, set to increase by 6.5% and 8.5%.

Even though they feel that emergence from the recession will be on the slow side, "Financial conditions have improved more than expected, owing mainly to public intervention, and recent data suggest that the rate of decline in economic activity is moderating," the IMF commented.

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Small Business Outlook- The Worst Is Behind US

There was a time when small and medium sized enterprises (SMEs) had a problem with staffing, today it is with customers. Where are the customers? With sales down, SMEs are coming up with creative ways to draw in customers from bundling items for specials of the day, to discounting individual items. Even with the creativity, SMEs are hoping to make a profit.

The state of the economy has SMEs concerned about the year ahead. Consumer spending has weakened. A recent article in the Canadian Business magazine sites a recent poll on the SMEs business outlook for the near future. The poll conducted by the Canadian Federation of Independent Business (CFIB) listed the Business Barometer index for Alberta as 53.2 for May, meaning SMEs in Alberta were slightly more optimistic than pessimistic about the near future. The outlook for the future varied in other provinces with Newfoundland and Labrador having one of the highest Business Barometers at 64.4, Quebec (52.2), and Ontario at 59.9.

The SMEs in Quebec and Ontario are highly dependent upon manufacturing and US trade. British Columbia has been affected by the housing market in the US and the lumber sectors. Optimism amongst SMEs is well below the historical average, however Ted Mallet, the CFIB’s chief economist believes the worst times could be behind business owners, but there is uncertainty when the recovery will begin and how long it will take.

The recovery should likely start in 2012, if not earlier, for Newfoundland and Labrador with the announcement from the government that the Hebron offshore oil project is moving forth. Although operation will be several years down the road (2016- 2018) this announcement has provided a glimmer of hope for SMEs. The project is estimated to create 3500 jobs and to generate approximately$20 billion in royalties over 20 - 25 years. This is obviously good news for businesses in Newfoundland and Labrador, hopefully there will be a similar turn for the rest of the country.

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Profit from Businesses Likely to Grow in Hard Times

Even as demand for exports decreases and consumers spend less in this recession, there are several industries in the U.S. and Canada that are looking to be thriving.

Five sectors that did well in previous recessions, according to economics professor Jack Carr of University of Toronto are food and beverages, health and well-being, telecommunications, business consulting and business-process outsourcing. This time they are expected to do well again.

Cheap Food

Campbell's Soup's sales have done well in other difficult economic times as people look to save on comfort foods. And in 2008 McDonald's saw an increase in their sales figures at a time when other companies saw decreases. Their sales grew 8.2% in October 2008 from October 2007, and by 6.9% the previous year.

Companies that produce food would do well to sell more in the way of basic staple foods to supermarket chains and attempt selling to lower-end family establishments. During the recession, most people are less interested in experimental cooking or luxury-type foods, says marketing professor Alan Middleton at York University.

Health Food and Fitness

“Right now, I’d be looking to invest in anything that helps people have healthier, happier lifestyles,” says Arlene Dickinson, CEO of Calgary-based marketing agency Venture Communications and a resident investor on CBC-TV’s reality show Dragons’ Den. Though people might not be able to currently afford expensive gym memberships, they may have more time to focus on exercise and purchase less expensive equipment and workout clothes to use at home as well as healthy, inexpensive foods.

Must Stay Wired (and Wireless)

Solutions Research Group, based in Toronto, has determined that Canadians will not be willing to give up their cellphones or net access and will be the among the last things to go when cutting down on non-essentials in their personal budgets. The BlackBerry Bold and Apple iPhone look like they will continue to be top sellers, as well as their respective accessories.

IT and Consulting Support

Like we said in a previous post (See “Bank on Opportunities from Big Firms”), as big corporations cut nonessential staff they may look to outsource certain needs like IT support and other types of consulting. Firms that specialize in Web conferencing and other communications alternatives to travel are also poised to succeed in this economy. These and other types of business-service providers would do well to push their services as being available at a decent rate for temporary solutions to corporations that need them.


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Nonprofits: A Growth Sector in Canada: Part II

Database Management, Consultants, Staffing and Branding

Despite large operating budgets, the bigger Canadian charities don't invest so much into IT such as economical database or web-based CRM programs that they could use to help with volunteer management, according to Artez Interactive CEO Philip King. Though mom-and-pop businesses are being employed by a few charities, “Few sophisticated, modern businesses have turned their attention to the charitable sector,” he says.

According to CharityVillage.com, the top 1% of nonprofits in Canada that have large budgets and earn about 59% of all revenue have too many consultants as it is. And 42% of Canadian charities operate with $30,000 or less. Charity consultant Alex Gill points to mid-sized charities as having potential because they are looking for efficient ways to improve their operations.

One area these groups may be willing to invest in is consultants and staff for projects in areas such as finance, fundraising and HR; if there are quality professionals available for less money. These may be easier to find in the current economy.

Another area is branding. Even though some ad agencies will work pro-bono for nonprofits, some charities are willing to invest in paying an agency that specializes in their sector and can work within a limited budget to develop the organization's identity.

However, King cautions that it takes awhile to build up a trusting work relationship with many charities and those groups are not so free with spending money. On the other hand, “For smart, patient people, it’s a good business — and a rewarding business,” he says.


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