What Is a Public Benefit Corporation?
27 States Support Benefit CorporationsAccording to BenefitCorp.net, a site run by the nonprofit lobbying group B Lab, 27 states currently have benefit corporation legislation. This includes the ever-popular Delaware, where many companies choose to incorporate. Each of these states has drafted its own specific requirements and protections for benefit corporations, but many of them are based on B Lab's model legislation. BenefitCorp.net reports that 14 other states have similar legislation pending to support benefit corporations, while the remaining states (including Texas and Washington state) have no analogous laws for public benefit corporations.
What Are the Benefits?For those business owners who choose to incorporate in states which support public benefit corporations, the following benefits may be conferred:
- Socially responsible purpose. By choosing to become a public benefit corporation, you will enshrine your altruistic purpose in your corporation's articles of incorporation, making them legally binding and not just a promise.
- More protection from corporate greed. When corporations grow, there is a worry that duty to the shareholders will require abandoning the company's commitment to doing good. In Delaware, for example, a two-thirds vote is required for any action that would terminate a company's status as a public benefit status
- Evaluations by third-party organizations. Worries about transparency within the corporate structure may be answered by requirements that public benefit corporations be evaluated by third-party organizations to audit their "public benefit" statuses.
- Delaware 'Public Benefit Corporation' Lets Directors Serve Three Masters Instead Of One (Forbes)
- Incorporating in Delaware? 5 Issues to Consider (FindLaw's Free Enterprise)
- C or S Corporation: What's the Legal Difference? (FindLaw's Free Enterprise)
- What Is a Closely Held Corporation? (FindLaw's Free Enterprise)
- Learn About Our DIY Business Formation Services (FindLaw Forms & Services)
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