Provincial legislation was introduced yesterday allowing 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.
The Ministry of Finance said 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 to the Business Corporations Act was introduced 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.
Additionally, 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 could not 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 benefit of the community.
