The British Columbia Business Corporations Act has been amended to provide for Canadian Contribution Companies (“CCC’s”) or (“C3’s”) which will be able to be incorporated in British Columbia from July 29, 2013. C3s, which are based on a similar model in the United Kingdom, are corporations which have a strict social enterprise, not-for-profit and charitable requirements. It is anticipated that C3’s would be able to raise investment capital, issue shares and declare dividends, none of which can be done under existing non-profits.
The C3’s will be a hybrid structure, which must have a social or community purpose, but they will be able to distribute shareholder dividends of up to 40% of the annual profits. The remaining 60% of the profits must be distributed to the C3’s community purpose.
Yearly Community Contribution Reports must also be published by a C3 which set out the total amount of dividends declared on all classes of shares, the identity of the shareholders receiving dividends and a list of all persons who receive remuneration exceeding $75,000. If a C3 dissolves, 60% of its assts must be distributed to charitable organisations or other ‘asset locked’ entities.
It is anticipated that C3s will be used by existing charitable organisations or not-for-profits who may wish to conduct a for-profit business, but cannot currently do so as they would risk losing their tax exemption.