B.C. Benefit Corporation Update

We previously reported on how British Columbia may become the first jurisdiction in Canada to permit benefit corporations. A private member's bill (Bill M 216) on benefit corporations was introduced in the 2018 Legislative Session and passed second reading, which is rare for a private member's bill. Dr. Andrew Weaver, the MLA who introduced the bill, decided to do further consultation and the bill died when the Legislative Assembly was prorogued in January. In the current session, Dr. Weaver introduced Bill M 209, Business Corporations Amendment Act (No. 2), 2019, which contains some amendments to the previous bill. Bill M 209 received royal assent on May 16, and the majority of its provisions will come into force by regulation of the Lieutenant Governor in Council.

What is a benefit corporation?

Benefit corporations are a type of U.S. corporation that is gaining traction internationally. In the U.S., shareholder primacy is generally the model for corporate governance. This means that directors exercise their fiduciary duties by acting in the best interests of the shareholders. U.S. jurisprudence has prohibited directors from taking into account the interests of stakeholders, putting a priority on maximizing profit shareholder benefit.

The benefit corporation is a response to shareholder primacy. It is a type of for-profit corporation with a mandate to conduct business for the purpose of creating a general public benefit. Directors may take into account public benefits and act in the best interests of those public benefits, without breaching their fiduciary duties.

Bill M 209

Bill M 209 proposes to amend the British Columbia Business Corporations Act ("BCBCA") by introducing "benefit companies." It is an opt-in model. Any B.C. company may become a benefit company by, on a special resolution of the shareholders, changing its notice of articles and its articles. The notice of articles must include the following benefit statement:

This company is a benefit company and, as such, is committed to conducting its business in a responsible and sustainable manner and promoting one or more public benefits.

The articles must also contain a provision setting out a commitment to conduct business in a a responsible and sustainable manner and to promote specific public benefits. A public benefit is "a positive effect, including of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific or...