CRA recently released a letter which discusses whether a Community Contribution Company (“C3”) incorporated in the province of British Columbia that elects not to distribute any of its profits to its shareholders, but donates all of the profits to a charitable organization, will qualify for exemption from tax under par. 149(1)(l).  CRA had the following comments:

The community contribution company is a new type of business corporation recently introduced in the British Columbia Business Corporations Act.  This novel corporate structure allows a for-profit share-capital corporation to do business and generate profits in the normal course of its commercial activities, while at the same time capping the dividends that can be paid out to shareholders. This ensures that a share of the profits are either retained by the company or directed for community benefit. The community contribution company is sometimes referred to as a hybrid corporate model because its structure allows profits to be generated and provides a (limited) return to the investor, such as is available with a traditional for-profit corporation, but at the same time provides social enterprise benefits to the community similar to charitable and non-profit organizations.
At the outset, a community contribution company, like any traditional business corporation, is a taxable corporation. You have inquired whether, in your client’s particular circumstances, the community contribution company may be eligible for exemption under paragraph 149(1)(l) of the Act since all of its profits are destined for charitable purposes with no part of the profits permitted to be distributed to the shareholders.
Even though all or substantially all of the profits of this particular community contribution company are destined for a good cause, with no part of the profits to be made available for the benefit of any shareholder, it will nevertheless be organized (and operated) for profit and, as such, would not qualify for the exemption under paragraph 149(1)(l) of the Act. For purposes of that exemption, the charitable destination of the profits does not remediate the disqualifying pursuit of a profit purpose.

CRA determined that the C3, regardless of how the funds would be distributed, operates as a for-profit business corporation and therefore cannot qualify as a non-profit, which must be organized and operated exclusively for purposes other than profit.  The C3 was determined to be a taxable corporation and not eligible for the exemption under par. 149(1)(l).

Here is a copy of the full CRA letter.