A new type of business registration is now available in B.C. which the provincial government says will “bridge the gap” between for-profit businesses and non-profits.
Regulations for the new business model, dubbed Community Contribution Company (CCC or C3), are now in effect.
While not new — C3’s are based on a model first introduced in the United Kingdom in 2005 (Community Interest Companies or CICs) — the government believes the new regulations will help social enterprises attract capital by appealing to philanthropic investors who still expect some financial return.
C3 status signals that a company has a legal obligation to conduct business for social purposes and not purely for private gain, according to a press release from the Ministry of Finance.
The regulations were developed in consultation with members of the B.C. Social Innovation Council. Public consultations were held in 2010.
C3’s are subject to an “asset lock” with a strict cap on dividends that can be paid out to shareholders. The bulk of a C3’s profits must go toward the C3’s community purposes or be retained or transferred to a qualified entity, such as a charity. They must also have three directors and are required to publish an annual report describing their activities.
“This new model will unlock new ways to generate meaningful, local employment in B.C. and generate economic wealth for our province by encouraging private investment in B.C.’s social enterprise sector,” said Minister of Finance Michael de Jong. “I’m excited to see the positive impacts the C3 model will have on B.C. businesses and communities.”
Social enterprises can exist in many business areas and have many different objectives, including health, environmental, cultural or educational. For example, a social enterprise could provide recycling services in a community with the social objective of generating employment in collecting recyclables and applying most of the profits to a local charity.
“We expect the C3 model will be attractive to charities operating unrelated businesses and traditional corporations wishing to entrench goals beyond that of maximizing shareholder profits,” said Stacey Corriveau, executive director for B.C. Centre for Social Enterprise.
There are two main ways to form a C3:
– A C3 designation can be chosen at the outset on incorporation of a new company.
– A pre-existing company can become a C3 by amending its name and constitution to reflect the C3 status. This would require the unanimous consent of the company’s shareholders.
In Castlegar, business licensing is handled by the Development Services department. They can be reached by telephone at 250-365-7227, or in-person at City Hall, 460 Columbia Avenue.