BC, The First Province To Propose A Legal Framework For Benefit Corporations

British Columbia introduced Bill M-216 to permit the incorporation of "benefits corporations" or "B-Corps", as do many U.S. states. Currently passed second reading, the proposed legislation will, if enacted, enable companies to incorporate as 'benefit companies', making British Columbia the first Canadian jurisdiction to provide a legal framework for companies that want to operate in a socially and environmentally responsible and sustainable manner, and pursue public benefits in addition to profit.

Bill M-216 proposes amendments to the B.C. Business Corporations Act that would add a new Part, enabling the incorporation of benefit companies. The Bill provides that a company is a benefit company if its notice of articles contains the following statement:

Bill M-216 provides that a company may become a benefit company by amending its articles to include a benefit statement, provided authorization by special resolution is received by its shareholders. The company's articles must include a commitment to (a) conducting its business in a responsible and sustainable manner,[1] and (b) promoting one or more public benefits[2] specified in the articles.

Bill M-216 further provides that director and officer duties are not limited to maximizing shareholder value but extend to the promotion of the public benefits specified in the company's benefit provision. Specifically, the Bill provides that:

Further, Bill M-216 provides that a benefit company must have the words "Benefit Company" or the abbreviation "B.Co." as part of its name.

The Bill addresses accountability and transparency, including the requirement to publish an annual Benefit Report, which discloses (in relation to the company's latest completed financial year) the following:

1. a fair and accurate description of the ways the benefit company demonstrated commitment to
   
   
   1. conducting its business in a responsible and sustainable manner, and
   2. promoting the public benefits specified in that benefit company's benefit provision;

2. a record of the assessment of the performance of the benefit company as compared against a third party standard,
3. the circumstances, if any, that hindered the benefit company's endeavours to carry out the purposes set out in that benefit company's benefit provision;
4. the process and rationale for selecting or changing the third party standard used to prepare the benefit report, including, as applicable,
5. 1. a statement that the standard was applied in a manner consistent with the benefit company's previous application of that standard,
   2. a statement that the standard was not applied as described in subparagraph (i) and the reasons for the inconsistency, or
   3. a statement that the report is the first benefit report for which the standard was selected and applied;

5. any other information required by the regulations.

Note that despite trending in other jurisdictions, most notably through U.S. states, Canada does not, to date, have in place any benefit corporation legislation. If Bill M-216 is passed, BC will be the first province to adopt such legislation. What Ontario currently offers is a certification process, through B Lab, which provides a way for companies to demonstrate their commitment to sustainability. B Lab requires that, to be certified, a company's articles of incorporation reflect its sustainability commitments.

Footnotes

1 The Bill defines "responsible and sustainable manner" in relation to the conduct of a business, to mean "a manner of conducting the business that (a) takes into account the well-being of persons affected by the operations of the benefit company, and (b) endeavours to use a fair and proportionate share of available environmental, social and economic resources and capacities".

2 The Bill defines "public benefit" to mean " a positive effect, including, without limitation, of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific or technological nature, for the benefit of (a) a class of persons, other than shareholders of the company in their capacity as shareholders, or a class of communities or organizations, or (b) the environment, including, without limitation, air, land, water, flora or fauna, or animal, fish or plant habitat."

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