Business Law
Author: Jennifer MacGregor-Greer
Effective June 30, 2020, changes to British Columbia corporate law have made it possible to incorporate a “benefit company”, a form of corporate entity that has been available in the United States for 10 years (in some states) but until now has not been available in Canada. British Columbia is the first Canadian jurisdiction to adopt this form of incorporation.
What is a benefit company?
A benefit company is a corporation whose constating documents specify that it is committed to:
- conducting its business in a responsible and sustainable manner, and
- promoting one or more public benefits.
- Benefit Statement: The benefit company’s Notice of Articles must contain a statement that the company is a benefit company and, as such, is committed to conducting its business in a responsible and sustainable manner and to promoting one or more public benefits. The benefit statement may only be amended or removed by way of special resolution of the voting shareholders of the company.
- Public Benefits: The Articles of the company must (a) specify the public benefits to be promoted by the benefit company, and (b) set out a commitment to conduct the benefit company’s business in a responsible and sustainable manner, and to promote the specified public benefits. The named public benefits may be of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific or technological nature, for the benefit of a class of persons other than the shareholders of the company, or for the benefit of the environment.
- Benefit Report: The benefit company must prepare and publish an annual benefit report, which must disclose:
- how the company has demonstrated commitment to conducting its business in accordance with the benefit statement and the company’s named public benefits during the previous year; and
- how well the benefit company has complied with a third-party standard in carrying out such commitments. The third-party standard used by the company for this purpose must be established by an entity that is not related to the benefit company and must assess the overall performance of the benefit company in relation to its conducting business in a responsible and sustainable manner, and in relation to the public benefits specified in the company’s Articles.
- Fiduciary Duty: The directors of a benefit company must not only act in accordance with the general fiduciary duties shared by all corporate directors (i.e. acting honestly and in good faith with a view to the best interests of the company), but must also 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. In performing their role, they are required to balance these two sets of duties.