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BC seeking framework for new 'hybrid' businesses with social missions

The BC government is exploring how to foster a new "hybrid" form of business in the province which combines some aspects of charitable non-profits with traits so far reserved for for-profits, including returns to investors.

The Ministry of Finance posted this invitation to consultation about the idea:

"The Ministry of Finance is considering amendments to the Business Corporations Act to allow for the incorporation of a new hybrid type of company -- the Community Interest Company (CIC) -- which would both benefit the larger community and allow limited investor returns within the context of a traditional for-profit company.

"CICs would be incorporated with all the flexibility and certainty of regular companies, but under legislation that ensures they primarily benefit the community. Dividends on CIC shares and interest on bonds would be capped to ensure that profits are either retained by the CIC or funneled to the community benefit. Becoming a CIC would signal publicly that a company will be conducting its business for social purposes and not purely for private gain. This "branding" could help attract investment capital that is currently not accessible to the social enterprise sector.

"CICs would allow an option currently not available with a regular business corporation, whose primary focus is making money for shareholders, or a society, which is not allowed to make a profit.

"The purpose of this consultation is to seek the input of all British Columbians on the CIC model and its potential impact on existing non-profit and for-profit entities operating in the province."

The ministry lays out a set of questions about the CIC model in its consultation letter.

Among the concerns the ministry wants citizens to weigh in on are whether CICs might unfairly compete against other enterprises for available capital, what levels of public accountability should be required, and "how broadly should 'community interest' be defined?"

The Ministry of Finance has set the deadline for feedback on the CIC model for Dec. 1, 2010.

"Delighted" by this development and circulating the news via email is Stacey Corriveau of the B.C. Centre for Social Enterprise, which has produced a body of research and analysis about how the CIC model and other innovative business arrangements can better carry out the building of "social infrastructure" placed at risk by the economic turndown.

Corriveau and non-profit law expert Richard Bridge published a paper last February arguing that "infrastructure is more than bricks, mortar, and pavement ... of equal importance is the organizational or legal infrastructure -- the laws, regulations, and public policies that enable the adaptation, redesign, and rebuilding needed by our economy and communities."

The authors urged governments to "modernize the organizational infrastructure that applies to social enterprise to better enable it to flourish. A relatively modest start would be new legislation enabling the creation of a legal structure specifically for the purpose of social enterprise."

David Beers is founding editor of The Tyee.

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