A New Class of Corporation for a New Class of Entrepreneurs

Benefit Corporations

Mission-driven companies pursuing purpose and profit

WHAT: A LEGAL ENTITY

Achieved through incorporation - like a C-Corporation, LLC, or Non-profit

Similar to traditional for-profit but with additional legal requirements

Operate almost identically to a traditional for-profit (corporate formalities, required filings, etc.).

The difference is commitment to higher standards …

PURPOSE, ACCOUNTABILITY, TRANSPARENCY

Purpose: To create a general public benefit Right to name specific

public benefit purpose

Accountability: affirmative fiduciary duty to consider not only shareholders but also stakeholders

Transparency: Requires publication of Annual Benefit Report

HOW:

BUSINESS AS A “FORCE FOR GOOD”

B Corporations idea was sparked by the 40 million people, worldwide, who are driving the social entrepreneurship movement.

Social entrepreneurs solve social and environmental issues by using the power and scale of business.

WHO IS THIS FOR? NOT JUST SOCIAL ENTREPRENEURS

For anybody who wants to “do well by doing good”

Pursue dual missions of social purpose and profit

In making business decisions, consider not only shareholders, but ALSO stakeholders including employees, suppliers, communities, and environment

inafutureage.wordpress.com 

www.methodlaundry.com

THE “FOUNDING” B CORPORATIONS

First company to incorporate in CA as a benefit corporation

PATAGONIA®

“We define the quality of our company, in part, by the degree to which we can

reduce our impact on the environment.”http://www.patagonia.com/us/home

METHOD®

One of first companies in Delaware to register as a benefit corporation

“Greenskeeping.”

http://www.greystonbakery.com/social-mission/

GREYSTON BAKERY

First New York Benefit Corporation

“… force for personal transformation and community

economic renewal”

http://www.greystonbakery.com/social-mission/

WHY: CEMENTING & PROTECTING MISSION

Because social purpose or environmental impact are inherent in the business

To protect officers/directors who make decisions that put other priorities ahead of the financial “bottom line”

Electing benefit corporation adds affirmative duty to account for non-financial interests in pursuing mission

WHERE: 20 JURISDICTIONS SO FAR….

KNOW YOUR STATE’S B CORP STATUTE

Most states’ statutes stem from model legislation’s uniform requirements for purpose, transparency, accountability

Some states vary slightly, but in key ways

California v.

Delaware

B CORP VS. BENEFIT CORPORATION

“B Corp” certification is similar to a LEED certification for buildings or a FairTrade certification for coffee.

Benefit Corporation is a legal entity available through each state’s corporate law statutes. Organizational structure like

the LLC or C-Corp.

• CERTIFIED B CORPS

• More than 800 companies

• BENEFIT CORPORATIONS

• First available in 2010 in Maryland• Now close to 300 companies

nationwide have registered• CA: At least 85• Delaware: 17 on first day of

enactment (Aug. 1 2013).

Sources: http://socentlaw.com/2013/07/how-many-benefit-corporations-have-been-formed/; http://www.bcorporation.net/; http://www.triplepundit.com/2013/08/delaware-benefit-corporations/

TAX IMPLICATIONS?

Benefit Corporation is treated no differently than traditional for-profit corporation

May elect S-Corp under existing statute

But quite possible there will be tax implications down the road.

CHOOSING B CORP VS. NON PROFIT

Social enterprises can be structured as either a non-profit or a for-profit entity

Both share common social and environmental goals but they are accomplished through different means

Benefit corporations presume return on investment, while non-profits seek charitable donations to fund business practices.

ACCOMPLISH THE SAME WITH LLC?

Yes, you can always draft or amend an LLC operating agreement to incorporate benefit corporation provisions and purposes.

But there are benefits to choosing incorporation over the LLC structure.

And there is huge market differentiation potential with choosing the benefit corporation structure over a traditional for-profit.

WHAT’S NEXT?

Questions?Leave a comment in the section below!

http://www.mycorporation.com/