Why does the minutes book need to be up-to-date when selling shares of a company?

When a company's shares are sold, the buyer acquires the company itself, with its legal history, rights and obligations, including its debts . Therefore, they generally want to review its corporate documentation as part of due diligence.

The minutes book allows, in particular, verification of:

• the identity of the shareholders and the ownership of the shares being sold;
• the categories or series of shares in circulation and the rights attached to them;
• restrictions applicable to the transfer of shares, if any;
• the issuance, transfer, repurchase, purchase and cancellation of shares;
• the identity of the directors and managers;
• the articles of incorporation and their amendments, as well as the regulations;
• the main decisions taken by the shareholders and directors;
• shareholder agreements and other relevant corporate documents, if applicable.

This verification is particularly important to confirm that the sellers hold the shares they are proposing to sell, to verify if their transfer is subject to certain restrictions, and to trace transactions that have changed the company's share capital over the years.

If the minutes book is incomplete or does not reflect the company's current situation, the buyer and their advisors may request additional information or documents. Certain irregularities may also need to be corrected before the transaction closes.

It is therefore advisable to review the minutes book and, where necessary, update corporate documentation before due diligence begins. This preparation facilitates the review of the file and reduces the risk of delays during the transaction.

In an asset sale, due diligence focuses primarily on the assets, contracts, rights, and obligations involved in the transaction. The minutes book can nevertheless remain relevant, particularly for verifying the powers and authorizations required for the sale.

In summary , when selling shares of a company, an up-to-date minutes book allows the buyer to verify share ownership, any restrictions that may apply to their transfer, the corporate structure, and the company's legal history. Complete documentation facilitates due diligence and contributes to a smooth transaction.