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Public-benefit corporation is a type of for-profit corporate entity that is required by law to balance the financial interests of shareholders with the interests of others materially impacted by its operations.[1]: 703 [2]: 243 Most states require public benefit corporations to provide a "material positive impact on society and the environment..."[3]: 502, 505 In Delaware, public-benefit corporations are required to both identify a specific public benefit the business promotes, and operate responsibly towards the public in a general sense.[2]: 244
Public-benefit corporations are different than, and often confused with, B Corps. B Corps are organizations that engage in a private contract with B Lab to certify they have adopted socially conscious decision-making standards.[4] BCorps are not a distinct form of legal entity.[4] There is also some confusion with the more general term, benefit corporation.[5] Benefit corporation is the term used by most U.S. states besides Delaware for similar legal entities.[5] Benefit corporation also refers to non-profits in some U.S. states.[5]
To be a public benefit corporation, the company's incorporation documents must state the public benefit the corporation intends to promote.[6] Additionally, the corporation has to publish reports related to its public benefit status.[1][6] For example, in Delaware, public-benefit corporations must publish reports explaining their public benefit goals, progress, and specific facts illustrating how they have benefited the public.[2]: 244 Delaware was the 19th state to create a form of benefit corporation[7] with sections 361-368 of Delaware General Corporate Law, which were passed in July 2013.[1]: 703
Delaware initially required a 90% shareholder vote to convert to a public-benefit corporation. This was reduced to 75% in 2015 and then to a simple majority in 2020.[8][9][10]
References
[edit]- ^ a b c Brownridge, Sean (2015). "Canning Plum Organics: The Avant-Garde Campbell Soup Company Acquisition and Delaware Public Benefit Corporations Wandering Revlon-Land". Delaware Journal of Corporate Law. 39 (3): 703–749.
- ^ a b c The Honorable Leo E. Strine, Jr. "Making it Easier for Directors to "Do the Right Thing"?". Harvard Business Law Review. 4. University of Pennsylvania Law School: 235–253.
- ^ Professor Lyman P. Q. Johnson (April 25, 2018). "Chapter 19: Managerial Duties in Social Enterprise: The Public Benefit Corporation". Managerial Duties in Social Enterprise: The Public Benefit Corporation. Washington and Lee University School of Law. pp. 502–520.
{{cite book}}:|work=ignored (help) - ^ a b Hiller, Janine (December 1, 2013). "The Benefit Corporation and Corporate Social Responsibility". Journal of Business Ethics. 118 (2): 290-291. doi:10.1007/s10551-012-1580-3.
- ^ a b c Dorff, Michael (2017). "Why Public Benefit Corporations?". Delaware Journal of Corporate Law. 42 (1): 86.
- ^ a b Katz, David; McIntosh, Laura (May 23, 2019). "Corporate Governance Update: The Corporate Form for Social Good". New York Law Journal.
- ^ Fisher, Daniel (July 16, 2013). "Delaware 'Public Benefit Corporation' Lets Directors Serve Three Masters Instead Of One". Forbes. Retrieved February 11, 2021.
- ^ Littenberg, Michael; Oldshue, Emily; Pifer, Brittany (August 31, 2020). "Delaware Public Benefit Corporations—Recent Developments". The Harvard Law School Forum on Corporate Governance. Retrieved February 25, 2021.
- ^ Lange, Elizabeth; Diffley, Elizabeth (July 22, 2020). "New Amendments to Delaware General Corporation Law Will Make It Easier for Companies to Become Public Benefit Corporations". The National Law Review. XI (25). Retrieved February 25, 2021.
- ^ Stone, Benjamin (March 2, 2021). "Public Benefit Corporations are Going Public". The National Law Review. XI (63). Retrieved March 5, 2021.