VICTORIA - Regulations allowing the creation of a new corporate structure designed to bridge the gap between for-profit businesses and non-profit enterprises received B.C. government approval this week.
The regulations, approved by order-in-council on Wednesday, allow for the incorporation of community contribution companies (CCCs), a hybrid business model aimed at encouraging private investment in B.C's social enterprise sector.
Based on a similar model adopted in the United Kingdom, CCCs will be able to accept equity investment money, issue shares and pay shareholder dividends, options that are not currently available to non-profits. Unlike typical for-profit companies, CCCs will have a limited ability to pay dividends. However, they will be able to assure potential investors that a portion of the company's profits will be used for social purposes.
The new regulations, slated to take effect on July 29, 2013, will bring into force a series of amendments to the Business Corporations Act that were passed last spring.
The legislation, the first of its kind in Canada, limits CCC shareholder dividends to 40 per cent of annual profits, leaving the bulk of profits to be used for the company's designated community purposes. CCCs will be required to publish an annual "community contribution report" providing details of their social spending, community activities and dividend payments.
Any CCC that is being dissolved would be subject to an "asset lock" to limit the distribution of assets to shareholders to a maximum of 40 per cent. The remaining 60 per cent would be distributed to charitable organizations and/or other asset-locked entities.
Long advocated by the province's social enterprise sector, Community Contribution Companies were among the measures recommended in a report released last year by the BC Social Innovation Council.
Minister of Social Development Moira Stilwell -
"I applaud these amendments that will create a new hybrid type of company in B.C. that combines the traditional benefits of a corporation with a social purpose. This step keeps British Columbia at the front of the pack when it comes to demonstrating leadership in the area of social innovation and social entrepreneurship."
Parliamentary Secretary for Non-Profit Partnerships to the Minister of Social Development Gordon Hogg -
"We are the first jurisdiction in Canada to create a Community Contribution Company. There are a number of wonderful social ventures and social entrepreneurs in our province and these amendments will support the great work they're doing and will help them to continue to find new ways of addressing some of our social challenges."
For more information contact:
Ministry of Finance