In May 2019, my private Member’s bill: Bill M209: Business Corporations Amendment Act, 2019 received royal assent but required an Order in Council to become enacted. That happened today. I’m delighted to report that effective immediately, the province is now officially the first jurisdiction in Canada to allow companies to incorporate as benefit companies.

As you will see from the government press release (that I reproduce below) I was pleased to sponsor this bill and to collaborate with government to see it become the first ever opposition private members’ bill passed into law in B.C. Our province is home to incredibly innovative companies that want to play a larger role in addressing the challenges and opportunities we face. This legislation helps position our province to be a leader on the cutting edge of global economic trends. By becoming the first jurisdiction in Canada to create benefit companies, B.C. can position our economy for success as we work to recover from the impacts of COVID-19 and beyond.

My bill amended the Business Corporations Act to create a new Part 2.3 that enabled companies to become benefit companies. These companies will have to meet certain requirements, including:

• Committing in their articles to operate in a socially responsible and environmentally sustainable manner, and to promote specific public benefits;
• The directors must act honestly and in good faith to pursue public benefits and consider the interests of persons affected by the company’s conduct
• Reporting publicly against an independent third party standard.

The choice to become a benefit corporation status is completely voluntary and has no impact on other existing corporations, other corporate forms, taxes or government regulation

It’s generally recognized that Canadian corporate law does not have a strict “shareholder primacy” rule as the US does, so directors of companies in Canada have more discretion to pursue a broader mandate beyond maximizing shareholder profits. However, this legislation was needed to

• Provide clarity for directors and shareholders about the nature and mandate of the company – avoid the risk of a shareholder challenge regarding the director’s duties;
• Provide certainty for impact investors of the nature and mandate of the company;
• Enable companies to attract capital while being true to their mission as they grow;
• Protect the vision of the founders of benefit companies from shareholder challenges;
• Provide a simple framework for companies to adhere to that is legally and commercially recognized.

This legislation also encourages more companies to pursue a socially responsible and environmentally sustainable approach to business, creating beneficial outcomes for society as a whole and leveraging the power of business to help us to tackle significant social and environmental challenges.

Below I reproduce government’s press release issued today. I am grateful to the Minister of Finance, the Legislative drafters, and Sarah Miller, a researcher in the BC Green Caucus, that I worked closely with in developing this legislation.

Government Press Release

New business option empowers companies to give back
For Immediate Release
2020FIN0038-001197
June 30, 2020
Ministry of Finance

VICTORIA – Through historic and collaborative legislation, British Columbia is the first province in Canada to create the option of benefit companies, a new way to do business that benefits people, communities and future generations.

“As government, we’re proud to support B.C. businesses that not only want to do well for their stakeholders, but also give back to their communities in important ways,” said Carole James, Minister of Finance. “By providing the framework through legislation, benefit companies will help propel B.C.’s economy into the future, grounded by the values and beliefs that define us as British Columbians. This is especially important now, as we work to build back better from the impacts COVID-19. I want to thank independent MLA for Oak-Bay Gordon Head Andrew Weaver and my colleagues in the third party for being champions of this new business structure from day one.”

Changes to the Business Corporations Act give British Columbians a new option when choosing a corporate structure for their business. A benefit company is a for-profit corporation committed to conducting its business in a responsible and sustainable manner, as well as promoting public benefits in addition to serving the interests of its shareholders. For example, the benefits could be artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific and/or technological.

“I was pleased to sponsor this bill and to collaborate with government to see it become the first ever opposition private members’ bill passed into law in B.C.,” Weaver said. “Our province is home to incredibly innovative companies that want to play a larger role in addressing the challenges and opportunities we face. This legislation helps position our province to be a leader on the cutting edge of global economic trends. By becoming the first jurisdiction in Canada to create benefit companies, B.C. can position our economy for success as we work to recover from the impacts of COVID-19 and beyond.”

A business that becomes a benefit company must:

• specify its public benefit goals in its articles of incorporation, allowing investors to determine if the stated public benefit aligns with their investment and social goals;
• complete and publish an annual benefit report assessing the company’s performance in its promotion of its stated public benefits;
• compare its progress against an independent, third-party standard;
• share the report publicly by making it available at the company’s records office and on the company’s website, if it has one; and
• require the company’s directors to balance the commitments in the benefit provision with their duty to act in the best interests of the company.

“Our work to expand and modernize BC Registries has played a key role in bringing this exciting legislation to life,” said Anne Kang, Minister of Citizens’ Services. “Allowing businesses to register as benefit companies gives them more tools to help improve our communities and the well-being of people. This initiative is another step forward in our work to deliver modern, reliable and easy-to-access services for British Columbians, where and when they need them.”

These amendments ensure that B.C. companies committed to considering the impact of their decisions are able to balance the needs of their shareholders with the values of British Columbians.

The values of collaboration, partnership and public good are foundational to the Confidence and Supply Agreement with the BC Green Party caucus, and it continues to provide the basis for a strong, stable government for British Columbia. By working together, progress continues to be made on shared priorities, like climate change, tackling the housing crisis and building a sustainable economy that works for everyone.

Quick Facts:

• Benefit companies were first introduced in 2010 in the United States and are now possible in 35 U.S. states, as well as Italy and Colombia.
• On May 16, 2019, the Business Corporations Amendment Act (No. 2) received royal assent.
• This is the first private member’s bill from an opposition party to be passed directly into law in B.C.

Learn More:

To learn more about the amendments, visit: www.bclaws.ca/civix/document/id/bills/billsprevious/4th41st:m209-1/search/CIVIX_DOCUMENT_ROOT_STEM:(Business%20Corporation)%20AND%20(benefit)?1#hit1