Should social enterprises have a special corporate structure?

May 31st, 2014 by Iler Campbell

The United States, the United Kingdom, British Columbia and Nova Scotia each have regulation which allows for “hybrid enterprises,” entities with both profit- making and non-profit goals. In a June 2010 report on the Canada Business Corporations Act (CBCA), the House of Commons Standing Committee on Industry, Science and Technology asked if the CBCA should be amended to include these entities too.

A public consultation period ended in May. Lauren and Brian contributed to the Ontario Nonprofit Network’s submission on the issue.

As detailed in the submission, the value of such hybrid enterprises have yet to be proven and emerging evidence shows that they do not work for the purposes intended. “Social entrepreneurs, investors and governments looking for blended returns (profit and social good) can undertake whatever agreements and contracts they wish under existing share capital corporate legislation. We recommend they be left free to experiment and evolve.”

The report recommends that the “government focus instead on improving the capacity of socially responsible enterprises operating as non-share capital organizations to earn income” and “on improving access for the full spectrum of socially responsible enterprises to appropriate capital investment.”

For those interested in the topic, the full submission makes for interesting reading.

Filed in: Not for Profit Law

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