The government of Ontario is about to start assessing advice
that it has solicited from business and professional experts on the
shape that legislation allowing for "dual-purpose"
business corporations might take.
The dual purposes of such corporations would be financial profit
and social good that extends beyond the creation of jobs and
Historically, the law has been taken to oblige corporations and
their directors and officers to concentrate uniquely on financial
profit. But, in recent years, there has been a trend among
businesses to adopt a "triple-P bottom line" –
profit, people, and planet.
The provincial government has said it wants to "support and
attract both entrepreneurs and investors to do business in Ontario
while contributing to the social good." The question is how to
achieve that when directors and officers fear they will be found
liable for compromising profit to other interests?
Last summer, the province asked corporate community stakeholders
for comment on how legislation allowing for dual-purpose
corporations might be structured. The comment period concluded in
The province received submissions from various parties,
including one from the authors of this article. In our submission,
we argue that the Ontario Business Corporations Act
(OBCA), and the business-judgment rule within it, should be amended
permit corporations to incorporate as benefit corporations or
amend their articles and become benefit corporations... (This
would) provide their directors and officers with enhanced freedom
to pursue social goals in addition to profit-maximization without
fear of potential liability for doing so;
incorporate into the statute the common law principles set out
in the BCE decision of the Supreme Court of Canada (which
recognized that the legitimate interests of corporations go beyond
profit alone.) In considering what is in the best interest of the
corporation, directors should be permitted to consider not only the
interests of shareholders, but also other stakeholders, including
employees, creditors, consumers, governments and the environment in
their decision-making. Directors should also be allowed to consider
both short and long-term interests of the corporation, including
benefits that may accrue to the benefit corporation from its
long-term plans, and need not give priority to any particular
protect investors, shareholders and directors... by adding
provisions for "purpose, accountability and
The benefit corporation is a strictly voluntary status and
serves as a for-profit model that enables a corporation to pursue
profit-generating activities while contemporaneously promoting
positive effects on society and the environment. It is
complementary to non-profit and charitable activities but on a much
While social enterprise legislation can be implemented at any
point along the spectrum of corporate entities, it may be most
useful for achieving goals of social good if implemented at the end
of the spectrum where for-profit corporations live. The goal should
be to enable for-profit enterprises to take action having regard to
profit, people and the planet as a complement to the activities of
governments and charities.
A solution at one point in the spectrum does not necessarily
exclude a solution at any other point in the spectrum or diminish
the contribution of an enterprise at any other point. Community
Contribution Corporation (CCC) and Community Interest Corporation
(CIC)-type legislation could be effective in the non-profit/charity
context; however, legislation enabling benefit corporations at the
for-profit end is a solution that is likely to be adopted quickly
and have a lasting impact.
ForThe Rise of the For-Profit Socially
Responsible Enterprise In Canada,a paper by Mr.
Tobin and Ms. Dalton on their submission to the Ontario Ministry of
Consumer Services that also contains background on benefit
corporation regimes in other parts of Canada and the United States,
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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