Why would a buyer of a company want to consult the minutes book?

When a business operated by a corporation is sold, the buyer of the company's shares generally wants to verify its legal and corporate status before concluding the transaction.

This verification is particularly important during a sale of shares since the buyer acquires the company itself, with its history, rights and obligations, including its debts.

As part of their due diligence, the buyer and their advisors may, in particular, examine the minutes book to verify:

• the identity of the shareholders and the shares they hold;
• the categories of shares issued and the rights attached to them;
• the statutes and their amendments, as well as the regulations;
• the issuance, transfer, repurchase, purchase or cancellation of shares;
• the identity of the directors and managers;
• certain important corporate resolutions and decisions;
• restrictions that may affect the sale or transfer of shares.

These checks allow the buyer to confirm that the sellers hold the shares they are proposing to sell and to identify certain irregularities or corporate issues that may need to be resolved before the transaction.

If the minutes book is incomplete or has not been updated, some additional checks or adjustments may be required before the sale is closed.

In an asset sale, the buyer does not acquire the company's shares. Therefore, the review of corporate documentation may differ and is generally more focused on the documents necessary for the transaction.

In summary , during a share sale, the buyer of the company typically consults the minutes book to verify the shareholding structure, legal organization, and certain important company decisions. An up-to-date minutes book facilitates this due diligence and allows for the quicker identification of issues that need to be addressed before the sale.