Effective June 30, 2020, a new type of British Columbia company, a “benefit company”, was introduced under the British Columbia Business Corporations Act. While popular in the U.S., British Columbia is the first jurisdiction in Canada to introduce benefit corporations.
What is a benefit company?
A benefit company is a for-profit company that promotes one or more public benefits and commits to conducting its business in a responsible and sustainable way.
The benefit company can choose any of the following activities to promote:
How to Incorporate a Benefit Company
The incorporation rules under the Business Corporations Act (British Columbia) that apply to a regular British Columbia company apply to a benefit company. In addition to those rules, a benefit company must have:
- Notice of Articles – a prescribed statement in its Notice of Articles, identifying it as a benefit company; and
- Articles – a benefit provision in its Articles that specifies the public benefits to be promoted by the benefit company, and sets out commitments to:
- to conduct the benefit company’s business in a responsible and sustainable manner; and
- to promote the public benefits specified in the Articles
The shareholders of an existing British Columbia company can pass a special resolution to alter the company’s Notice of Articles and Articles, as set out above, in order to become a benefit company.
Directors and officers of a benefit company must:
- act honestly and in good faith with a view to:
- conducting the business in a responsible and sustainable manner, and
- promoting the public benefits specified in the company’s articles, and
- balance these duties with the duty under the BCA to act honestly and in good faith with a view to the best interests of the company.
In addition to the regular reporting obligations of a British Columbia company, a benefit company must produce an annual “benefit report”.
The benefit report must provide an assessment of the company’s performance that year against a third-party standard. The benefit company must choose a third-party standard that it will use to assess its performance in meeting its commitments to conduct its business in a responsible and sustainable manner and to promote its public benefits.
There is no government oversight of the annual assessments, which is done by the company itself.
If you have any questions or would like assistance with establishing a benefit company, please contact us at 604-688-4900 or by email at firstname.lastname@example.org or email@example.com.