Overview
A community contribution company (CCC) is a hybrid company aimed at promoting social enterprise. CCCs are for-profit companies with a socially beneficial purpose. They have much of the same flexibility of regular corporations but are restricted in how they use their assets. This ensures their operations primarily benefit the community.
Benefits
British Columbia is the first Canadian jurisdiction to introduce CCCs. Now, socially conscious investors who still expect some financial return have a new corporate vehicle. A CCC can operate for profit enterprises much like any other business corporations, as long as at least one of its primary purposes is beneficial to the community.
This is a unique advantage over non-profit entities, which also have socially beneficial purposes, but often face difficulties in raising funds. On the other hand, traditional corporations cannot assure community-minded investors that their investments will be used for social purposes. CCCs are intended to bridge this gap. Since CCCs can issue shares and pay dividends, they can attract capital more readily. At the same time, investors will be assured that most profits from commercial activities are used for the benefit of the community.
Becoming a CCC
The CCC structure is available to both new applicants and pre-existing companies. New applicants must reserve an appropriate corporate name and file an incorporation application. The corporate name must contain the words “Community Contribution Company” or “CCC”. Existing companies can file a “Notice of Alteration from BC Company to Become a CCC” after reserving an appropriate name. Societies can become a CCC by first converting to a BC company. Note that the conversion process is only available to societies without a charitable purpose.
CCCs must have a community purpose. Any purpose that is beneficial to society at large or a segment of society that is broader than the group of persons who are related to the CCC will qualify. The following are some recognized community purposes:
-
Health services
-
Social services
-
Environmental services
-
Cultural services
-
Education services
Restrictions
CCCs are subject to restrictions in dealing with their assets:
|
Dividends |
As a rule, a maximum of 40% of its annual profits may be distributed as dividends. |
|
Dissolution |
Upon dissolution, at least 60% of its assets must be distributed to community service cooperatives, registered charities or qualified donees as defined in the Income Tax Act (Canada). |
|
Payments & Asset Transfers by a CCC |
Generally speaking, payments and transfers of assets by the CCC must fall into one of these categories:
Transfers in the ordinary course of business are permitted if the fair market value of the goods or services received in return can reasonably be expected to be equal to the transferred money or other assets. |
Additional restrictions apply in respect of financial assistance by the CCC and transfers to related persons (such as directors, officers and shareholders).
These restrictions ensure CCCs primarily benefit the community.
Accountability & Reporting
Unlike a regular company, CCCs must have at least three directors and cannot waive the obligation to produce financial statements. In addition, CCCs must publish annual community contribution reports. The report must set out, among other things:
-
a description of how the CCC’s activities benefited society
-
a description of the sums and assets transferred to further the CCC’s community purposes and a description of such purposes
-
dividends declared, redemptions or reductions of capital
-
information on each person who received $75,000 or more in remuneration
-
information on transferees who received transfers with a value exceeding $10,000 in the aggregate
-
annual financial statements
Income Taxes
Like other business corporations, CCC’s must pay corporate income tax. Exemptions enjoyed by registered charities are not available to CCCs.
If you have any additional inquiries, please contact Dierk Ullrich or Kai Alderson.
