A municipality or a regional district can incorporate or invest shares in a corporation to provide or support an economic development function to the community or region. A corporation is a legal entity separate and apart from its owners, the shareholders.
Legally, it has all the rights and obligations of an individual. A corporation can enter into contracts, own real property, sue and be sued.
The establishment of a corporation limits legal liability, protecting the local government from financial risk. A corporation also engages external expertise, freeing council and board time, achieving economies of scale and using an operating model distinct from a local government department.
Limitations include liability, financial risk, potential income, tax implications, potential conflict of interest, challenges around communication and relationship building, and performance metrics can be difficult to establish.
How to Proceed
The Local Government Coporations guide provides more in-depth information on establishing a corporation.