The scope of Corporate Commercial Law is difficult to define since it (a) means different things to different people; and (b) necessarily incorporates practice areas which, in some firms, are distinct areas of specialization, i.e., corporate finance, insolvency, etc. Please note Lexpert® has separate sections for corporate finance & securities, corporate tax, banking & financial institutions, insolvency & financial restructuring, and asset equipment finance/leasing.
Although these practice areas are clearly related (and often integral) to corporate/commercial practices, they have developed distinct identities and are dealt with, therefore, in separate sections. Undoubtedly leading firms and practitioners in one related practice area, e.g., corporate finance & securities, will often be leading firms and practitioners in corporate commercial law as well.
The Benefit Company
On June 30, 2020, an amendment to the British Columbia Business Corporations Act (BCBCA) came into force creating a new type of corporate entity: the benefit company. A benefit company is obliged to carry out its business in a responsible and sustainable manner and to advance at least one public benefit, which may be artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific, or technological in nature. A benefit company is bound by the rules of the BCBCA and the following requirements:
- a benefit statement found in its notice of articles;
- a benefit provision found in its articles, declaring its public benefits and its commitments to those benefits and to a responsible and sustainable manner of conducting business; and
- a benefit report, published and posted annually on the company’s website, if any.
In an interview with Canadian Lawyer, Valerie Mann, a partner at Lawson Lundell in Vancouver, said the move follows in the footsteps of 36 US states using this type of corporate vehicle to help maneuver in a world of “evolving stakeholder capitalism.”1
Mann’s colleague at Lawson Lundell, Chat Ortved, added that a benefit company must have a clear public purpose enshrined in their articles and pursue that purpose in a way that accounts for the well-being of stakeholders. It must also agree to use a “fair and proportionate share” of available resources.
Further to that, benefit companies must also disclose an assessment of how they are meeting those stated objectives, measured against a third-party standard. These legal requirements are enforceable against the corporation by shareholders. Mann said her firm already received several inquiries about what is needed to become a benefit company.
Proposed Beneficial Ownership Registry
In an effort to combat money laundering, terrorist financing, tax evasion, and tax avoidance, the Government of Canada is exploring options to make the registers of individuals with significant control of federally incorporated, privately held businesses more readily available to law enforcement and authorities, including the creation of a public registry.
The Federation of Law Societies of Canada indicated its support for the proposed establishment of a beneficial ownership registry for federally incorporated companies, in written comments responding to a consultation paper released by the Department of Innovation, Science and Economic Development and the Department of Finance, which discussed corporate beneficial ownership transparency in Canada.
As reported in Canadian Lawyer, law societies across Canada have, for over 15 years, expressed their commitment to fighting money laundering and terrorist financing through the implementation of certain regulatory requirements, professional conduct rules, and financial accounting rules.2
One such measure adopted by all Canadian law societies is the client identification and verification rule, which requires lawyers to record basic information about their clients and to verify the identities of their clients. The rule was adjusted in 2018 in accordance with federal regulatory changes relating to the identification of beneficial owners of organizations.
Access to a beneficial ownership registry would help legal professionals, and also law enforcement and other relevant authorities, in complying with due diligence obligations to identify beneficial owners, as required by anti-money laundering and terrorist financing legislation or by law society rules across provinces and territories, the Federation said.
Aside from providing authorities with access to corporate ownership information, the proposed beneficial ownership registry is also expected to speed up investigations and to decrease the risk of entities discovering that they are under investigation.
- Olijnyk, Zena. “BC brings ‘benefit company’ corporate status to Canada.” Canadian Lawyer. October 1, 2020. https://www.canadianlawyermag.com/practice-areas/corporate-commercial/b.c.-brings-benefit-company-corporate-status-to-canada/333841.
- Carolino, Bernise. “Federation of Law Societies backs proposed beneficial ownership registry.” Canadian Lawyer. June 5, 2020. https://www.canadianlawyermag.com/practice-areas/corporate-commercial/federation-of-law-societies-backs-proposed-beneficial-ownership-registry/330297.