Invest in Rwanda: A Community Benefit Company (CBC)

May 19, 2022 10:43 am

The Rwandan Company Law of 2021 established the Community Benefit Company (CBC). A CBC is defined under the law as a company with primary social objectives, whose surpluses are re-invested in the business or the community, rather than being driven by the need to maximize profit for its shareholders or owners. In simpler terms, a CBC is incorporated by owners/shareholders who are not profit-oriented, as profits are reinvested in the company to achieve its social objectives.

While a CBC may seem similar to a Non-Governmental Organization (NGO), the key difference is that an NGO does not make profits and relies mostly on grants and donations to achieve its objectives. In contrast, a CBC conducts business and generates profits like any other company, but its profits are reinvested in the company rather than distributed as dividends to shareholders.

One of the main purposes of a CBC is to have a positive impact on society and the environment, proportional to the size and nature of the business operated by the company.

Social Objectives of a Community Benefit Company:

According to the Rwandan Company Law, the social objectives of a CBC include:

• Providing low-income or underserved individuals or communities with beneficial products or services
• Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business
• Conserving and promoting the environment
• Improving human health
• Promoting the arts, sciences, and advancement of knowledge
• Conferring any other particular benefit on society or the environment

A private or public company can also achieve CBC status if its incorporation documents include a statement that the company is a Community Benefit Company.

Essential Requirements for Incorporation of a Community Benefit Company:

• A company name ending with the words “Community Benefit Company” or the abbreviation “CBC”
• A certified true copy of Articles of Association outlining the company’s objectives, including the social objectives it intends to achieve with its profits
• A notarized Shareholders’ Resolution, including a statement that the company will be registered as a Community Benefit Company

Benefits Accruing to a Community Benefit Company:

The Company Law states that an Order of the Minister determines the benefits accruing to CBC shareholders and the requirements to be eligible for such benefits. As of now, this Ministerial Order has not been issued, meaning that a CBC is treated like any other ordinary company until the Order is in place.

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This guide is intended to provide general information and does not constitute legal advice. For specific legal advice tailored to your situation, please consult with a qualified attorney at Stabit Advocates.