ARMA (Association of Records Managers & Administrators) defines a permanent record as a “record that has been determined to have sufficient historical, administrative, legal, fiscal, or other value to warrant continuing preservation.[i]” Continuing preservation implies that it extends for a long time, but just how long? Does retention end if the company goes bankrupt, or if the business unit owning/creating the record divests?
While counter-intuitive to the normal use of the word, the common Records Management understanding of a permanent retention period is normally framed in the context of a company’s existence. After all, what good are a company’s records if the company no longer exists and who is even around to keep the records? However, there are legal requirements to keep records after a company dissolves. For example, Canada’s Income Tax Regulations require many corporate and accounting records to be kept for 2 years after a company dissolves[ii]. In these situations the records retention period of permanent, as it’s commonly understood, may not be long enough for legal compliance unless time is added to the end of it. Permanent (PRM) + 2 years sounds a bit funny doesn’t it?
To avoid an awkward retention period like PRM+2 an option is to use the retention period Life of Company (LOC) instead. LOC+ more accurately captures the intent that the records be retained only as long as the company exists. While no one likes to contemplate divestment of a company or one if its subsidiaries, thinking ahead and using a retention period like LOC+ is one less thing to worry about should a company go out of business, and ensures compliance with those requirements to keep records after a company dissolves.
Disclaimer: The purpose of this post is to provide general education on Information Governance topics. The statements are informational only and do not constitute legal advice. If you have specific questions regarding the application of the law to your business activities, you should seek the advice of your legal counsel.
[i] ARMA International. Glossary of Records and Information Management Terms, 3rd ed. Lenexa, KS: ARMA International, 2007.
[ii] Canada Income Tax Regulations (5800)(1)(a), http://laws-lois.justice.gc.ca/eng/regulations/c.r.c.,_c._945/FullText.html