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11 September 20228 minute read

Is there any benefit to a benefit company in British Columbia?‎

In 2020, British Columbia introduced a new form of corporate structure: the benefit company. This new type of corporation added to the existing corporate structures available under the British Columbia Business Corporations Act, which include the ordinary corporation, the unlimited liability company, and the community contribution company. In this brief primer we outline what a benefit company is, what it requires, and how they are being used in BC.

What is a benefit company?

Broadly, a benefit company is a for-profit company that is committed to conducting its business in a “responsible and sustainable manner”, and to promoting one or more “public benefits”. Benefit companies are distinct from the not-for-profit/non-profit organizations which may be formed under the British Columbia Societies Act.

In order to conduct its business in a “responsible and sustainable manner”, a company must take into account the well-being of persons affected by its operations, and endeavour to use a fair and proportionate share of available environmental, social and economic resources and capacities.

A “public benefit” is a positive effect (including 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 in their capacity as shareholders), communities or organizations, or the environment.

Benefit company requirements

Benefit statement and provision

A benefit company must include a prescribed “benefit statement” in its notice of articles: ‎“This company is a benefit company and, as such, is committed to conducted its business in a responsible and ‎sustainable manner and promoting one or more public benefits.”‎ It must then also include a “benefit provision” in its articles that specifies the public benefits to be promoted by the company and sets out the company’s commitment to conduct its business in a responsible and sustainable manner and to promote the specified public benefits. The benefit provision is not prescribed by the Act in the same way as the benefit statement.

Benefit report

A benefit company must also produce and publish an annual “benefit report” that assesses the company’s performance in carrying out its commitments set forth in the benefit provision against a third party standard selected by the directors of the company. This required assessment is to be conducted internally by the company’s directors, not by the standard setting independent third party, nor does any governmental or regulatory body conduct a substantive evaluation of this assessment.

The directors of the company must approve the benefit report and it must be signed by at least one of the directors. It is an offence, punishable by a fine up to $5,000 in the case of a non-individual person and up to $2,000 in the case of a person, to publish a benefit report that has not been approved or signed by the directors of the company, to fail to publish or post a benefit report, or to publish or post a benefit report that does not comply with the Act or its regulations.

Directors’ and officers’ duties

The directors and officers of a benefit company are subject to a new duty to 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 benefit provision. They must also balance this new duty with their existing fiduciary duty to act honestly and in good faith with a view to the best interests of the company. There is not yet any guidance from case law on how any potential conflict between these two duties should be resolved, however, the Act expressly states that a director or officer will not breach their fiduciary duty to the company only by reason of acting in accordance with the new benefit company duties.

US Influence and Controversy

Benefit corporations became popular in the United States in response to case law that requires directors to maximize shareholder value, above the interests of other stakeholders. By comparison, case law in Canada - most notably the Supreme Court of Canada decision in BCE Inc. v 1976 Debentureholders - has developed to permit, and even require, directors to take the interests of affected stakeholders (which can be as globally encompassing as shareholders, employees, creditors, consumers, governments and the environment) into account in considering what is in the best interests of the company, viewed as a responsible corporate citizen.

As a result, there has been significant debate in the Canadian legal community and among commentators as to whether the benefit company is a desirable addition to the Act. While the benefit company undoubtedly places a positive obligation on the directors to consider how business decisions will impact the company’s commitment to conduct its business in a responsible and sustainable manner and to promote its chosen, stated public benefits, it remains to be seen how these new duties will be interpreted or shaped by the courts, particularly in light of the existing scope of the fiduciary duty in Canada. Some question whether the addition of the benefit company actually creates an interpretive implication that lessens the duties to non-shareholder stakeholders previously recognized in Canadian common law.

Despite the benefit company duties, directors and officers of a benefit company have no duty to an individual person whose well-being may be affected by the company’s conduct or who has an interest in a public benefit set out in the company’s benefit provision. Furthermore, such persons may not bring legal proceedings against a director or officer of a benefit company for breach of the new duties. That right is reserved for shareholders of the company who hold, in the aggregate, at least two percent of the company’s shares, or, in the case of a public company, at least the lesser of two percent of the company’s shares or shares with a fair market value of at least $2 million. Finally, no monetary damages can be awarded against directors and officers for a breach of the new benefit company duties. This has again raised the question as to whether the benefit company provisions create a liability shield which would not have existed previously at common law.

How to become a benefit company

A benefit company can be incorporated in the same manner as an ordinary corporation, provided that it includes the benefit statement in its notice of articles and a benefit provision in its articles.

An existing BC company can become a benefit company at any time by amending its notice of articles and articles to include the benefit statement and benefit provision, respectively. Alternatively, a company can cease being a benefit company by removing the benefit statement and benefit provision from its notice of articles and articles. However, the Act provides certain rights for a shareholder of a company, whether or not their shares carry the right to vote, to dissent to a resolution to alter the company’s notice of articles and articles to include or delete a benefit statement and benefit provision, as the case may be.

As part of this process, the benefit company should also be considering the independent third party standards by which they will be reviewed. If actual certification will be sought, for many of these standards, parties will have their own requirements which may include specific language being adopted in the benefit company’s articles. B Lab, which provides the popular “B Corp” certification brand in the US, requires that the entity be formed under local “benefit corporation” legislation, if any, and also requires certain prescribed language to be used, along with day-to-day operational requirements.

Why become a benefit company?

For those companies that wish to pursue public benefits, the benefit company structure may offer an attractive alternative to the little used community contribution company (“C3”) structure that was introduced in BC in 2013. Like a C3, a benefit company must promote a public benefit, but, unlike a C3, a benefit company is not subject to restrictions on the distribution of profits or assets. Also, unlike a C3, which must have the words “Community Contribution Company” or “CCC” as part of its name, benefit companies are not subject to any specific naming requirements beyond those generally applicable to a corporation in BC.

The benefit company is framed as allowing companies to pursue both public benefits and economic gain. While Canadian companies have always had this ability (and in some respects, requirement), the benefit company structure is a clear signal to investors, customers, and the public that it is committed to conducting its business in a socially responsible manner and to promoting public benefits. In light of growing public (and investor) focus on sustainability and environmental, social and governance (ESG) practices and initiatives in recent years, benefit companies may prove to be attractive to investors, business partners and customers who value sustainability and socially responsible business practices.

For more information you may contact the authors or any member of our Canadian Corporate group.


This article provides only general information about legal issues and developments, and is not intended to provide specific legal advice. Please see our disclaimer for more details.