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.