A community contribution company (“CCC”) is a type of corporation incorporated pursuant to the Business Corporations Act of British Columbia. There several distinctions between a traditional corporation and a CCC. Please find a few of the key distinctions below:
- A CCC must have a “community purpose”, meaning a purpose beneficial to society at large or a segment of society that is broader than the group of persons who are related to the CCC. Community purposes include, without limitation, providing health, social, environmental, cultural, educational or other services. This purpose must be expressly stated in the CCC’s articles.
- A CCC must contribute at least 60% of its annual profits towards the CCC’s community purpose each year.
- The name of the CCC must include the words “Community Contribution Company” or “CCC”. This is in addition to the other name requirements imposed by the Business Corporations Act.
- A CCC must have at least 3 directors. Please note that unlike a traditional corporation (which requires only 1 director), the directors of a CCC cannot delegate any of the directors’ management or supervisory powers to other persons.
- A CCC is prohibited from transferring any of its money or assets unless the transfer complies with the Business Corporations Act and the Community Contribution Company Regulation. For example, any such transfer (including dividends, distributions on dissolution, redemptions or purchase of share or other reductions of capital) must be for fair market value to a qualified entity (as defined in the Business Corporations Act) in furtherance of the CC’s community purpose.
- Unlike a traditional corporation, a CCC may not waive the directors’ obligation to produce and publish financial statements on an annual basis.
- A CCC must publish various items on an annual basis including, without limitation:
- a. a fair and accurate description of the manner in which the CCC’s activities during that financial year benefited society;
- b. the assets, including the amounts of money, that were transferred during that financial year in furtherance of the CCC’s community purposes and the purpose of any such transfers;
- c. the assets, including the amounts of money, that were transferred during that financial year for redemptions or purchases of shares or other reductions of capital;
- d. the amounts of the dividends that were declared during the financial year;
- e. if, during the financial year, the CCC transferred money or assets with a fair market value in excess of the prescribed amount, to a qualified entity or by way of financial assistance, details of the transfer(s) including the identity of the transferee, the purpose of the transfer and the amount or fair estimate of the amount transferred.
- There are certain restrictions on amalgamating a CCC with another corporation.
As noted above, there are significantly more restrictions and obligations imposed on CCCs as compared to traditional corporations in British Columbia. These restrictions and obligations will lead to additional time and costs on an annual basis. For that reason, it is prudent to you seek advice from your accountant to determine if a CCC is the best fit for you from a tax perspective and investigate any the requirements of any grants you wish to apply for before proceeding with incorporating a CCC.
In certain circumstances, a favourable alternative to incorporating a CCC is incorporating a society under the Societies Act of British Columbia. A society is a not-for-profit organization which chooses to incorporate as a “society” under the Societies Act of British Columbia. An incorporated society may be formed for any lawful purpose or purposes, including agricultural, artistic, benevolent, charitable, educational, environmental, patriotic, philanthropic, political, professional, recreational, religious, scientific, social or sporting purposes. In the event that an incorporated society is eligible to do so, it may also register to become a charitable organization in Canada. Registration of a charity gives the society special tax privileges. For example, the society does not have to pay income tax and can issue tax receipts to its donors. It is prudent to seek the advice of an accountant to determine the potential tax benefits of incorporating a society and/or registering as a charitable organization.
If you have any questions regarding the above or different corporate structures, please feel free to reach out to one of our lawyers practicing in the area of corporate/commercial law at (250) 448-2637.
Author: Danielle (Dani) Brito
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of business law at the following: Una Gabie: firstname.lastname@example.org Danielle (Dani) Brito: email@example.com Jane Otterstrom: firstname.lastname@example.org Sasha Platz: email@example.com