This new class of for-profit company should do its business responsibly and sustainably
B.C. will soon introduce a new type of corporate entity called the benefit company.
The benefit company, which comes into force on June 30 as an amendment to the Business Corporations Act, SBC 2002, c 57, is obliged to carry out its business in a responsible and sustainable manner and to advance at least one public benefit, which may be artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific or technological in nature.
A benefit company is bound by the rules in the Business Corporations Act, as well as a few additional requirements, which include:
- a benefit statement found in its notice of articles
- a benefit provision found in its articles, declaring its public benefits and its commitments to those benefits and to a responsible and sustainable manner of conducting business
- a benefit report, published and posted annually on the company’s website, if any
For a new entity to incorporate as a benefit company, it should adhere to the rules in the Business Corporations Act, as well as the first and second aforementioned requirements. On the other hand, an existing company can become a benefit company by inserting a benefit statement in its notice of articles through alteration, which is authorized by the shareholders via a special resolution and which is communicated to the registry via filing a notice of alteration. Additionally, the company should insert a benefit provision in its articles.
For the annual benefit report, the benefit company should assess its own performance — namely, regarding its efforts to promote its public benefits and its manner of conducting business — against a third-party standard. The benefit company should make its annual reports available to the public, who may access the reports for free in the company’s office or who may read the reports on the company’s website, if any.
“B.C. benefit company status can help socially responsible enterprises signal their fundamental commitment to social and environmental goals,” wrote Denise Duifhuis, a lawyer at Stikeman Elliott LLP, in an article on the firm’s website.
Corporate and commercial lawyers and other interested individuals may learn more about benefit companies through an online information session hosted by the B.C. government at 11:00 am to 12:00 pm on June 24, for which one can sign up via email to BCREG.Engagement@gov.bc.ca.