VICTORIA - Changes to the Business Corporations Act would allow for a new hybrid type of company - the community contribution company - that combines socially beneficial purposes with a restricted ability to distribute profits to shareholders.
This new type of hybrid corporation responds to an emerging demand for socially focused investment options and can help foster social enterprise investments.
The changes were introduced in the legislature today as part of Bill 23, Finance Statutes Amendment Act, 2012.
Community contribution companies would be structured to combine both benefits to the community and limited investor returns within the context of a traditional for-profit company. They would be incorporated with the flexibility and certainty of regular companies, but under legislation that ensures they primarily benefit the community. These companies would allow an alternative business model not currently available through a regular business, whose primary focus is making money for shareholders or a non-profit society.
These companies would be subject to a higher degree of accountability than an ordinary company and required to publish an annual report detailing their social spending. Restrictions on corporate reorganizations would ensure that payout restrictions cannot be circumvented. On dissolution, the company would be subject to an "asset lock" - capping dividends on the company shares to ensure that profits are either retained by the company or directed to the community benefit.
Subject to passage of the legislation, government will continue to work in the coming months to develop the regulations necessary to implement the legislation.
The Finance Statutes Amendment Act also provides for changes to the following statutes:
Cooperative Association Act - changes will strengthen the procedural safeguards that protect co-op members on termination. Housing cooperatives will benefit from new, streamlined procedures for terminating membership if the member fails to pay rent or other occupancy charges.
Financial Institutions Act and Pensions Benefits Standards Act - Currently, the statutory responsibilities of the public servant who runs the Financial Institutions Commission are assigned by multiple processes. Amendments to these acts would streamline the processes, enhance accountability and ensure consistency with other commissions.
The Finance Statutes Amendment Act also revises the enabling statutes of a number of government organizations to expressly recognize and clarify the authority of the auditor general as laid out in the Auditor General Act and remove any conflicting language.
As well, it amends the Business Corporations Act, the Cooperative Association Act and the Partnership Act to ensure the continued effectiveness of each statute and support the expansion of online filing for partnerships. Amendments will increase consistency across the statutes, remove impediments to business and increase administrative efficiencies for Corporate Registry filings.
Ministry of Finance