benefit corps presentation without notes
TRANSCRIPT
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Benefit Corporations
What they are
Why they matter
How they are formed
How are they treated
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A legal alternative for socially conscious companies to legally declare and implement those ideals that represent a material positive impact on society and the environment.
Maximize Shared
Values
Maximize ShareholderValue
Benefit Corporations
20th Century
21st Century
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Also known as:
Benefit Corporations – general public benefitFlexible Purpose Corporations – a single purposeMaryland Benefit LLC – essentially the same as their benefit corporation legislation (but allows for existing Maryland LLC’s to convert without having to convert over to a corporation first)L2C’s – low profit LLC’s with a charitable or educational purpose (some interesting things going on with these entities with the IRS
looking to treat these entities as eligible to receive Foundation grants)
Benefit Corporations
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Some of the key differences between a benefit corporation versus a traditional corporation:
Traditional corporations:• State Supreme Courts have long ruled that “a business
corporation is organized and carried on primarily for the profit of the stockholders”.
• Board of director fiduciary duties to its shareholders lie in a duty of loyalty and duty of care.
• Directors are held liable for corporate day-to-day decisions. A “business judgment rule” is applied to ensure that actions take into consideration shareholder value.
Benefit Corporations
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Some of the key differences between a benefit corporation versus a traditional corporation:
Benefit corporations:• Board of directors are required to consider the effects of
decisions on all stakeholders.• Responsible to measure its effectiveness (against a third
party standard*) of making a positive impact on society by publishing a public report
*11 different standard setters, however gov’t does not influence standards; not required to adopt a single standard, standards not required to be audited
Benefit Corporations
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1,100+ B Corporations in 120 Industries in 40 Countries
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Currently there are 27 states with benefit corporation legislation on the books
Benefit Corporations
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Benefit corporations are formed just like traditional corporations according to the state specific legislative requirements. For Pennsylvania, those requirement include the following:
File Articles of Incorporation prescribed by state law.• Purpose
• Declare commitment to creating general public benefit• Supermajority vote of shareholders (67%+)• Assess itself against a third party standard
• Accountability – requires directors to consider society and environment in addition to profit. Provides shareholders with a right of action to function with new purpose.
• Transparency – produce an annual Benefit Report (similar in form to the filing of articles of incorporation) assessed against a third party standard
Benefit Corporations
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Benefit corporations treated just like traditional corporations (C-Corp or S-Corp).
There is no distinction in the eyes of the IRS or state departments of revenue.
Benefit Corporations
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Certified B Corporations
Certified B Corporations – certified by non-profit B Lab
Simlar to LEED certification for green buidlingFair Trade certification for coffee and chocolateUSDA Organic for milk products
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Certified B Corporations v. Benefit Corporations Comparisons
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I am inspired by Greyston Bakery
Yonkers, New York
Hires & trains previously incarcerated individuals
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Why B Corps Matter
B Corps
• Accelerate the evolution of capitalism• Redefine success in business• Concrete and measurable• Build collective voice• Better businesses• Help us live to a higher purpose• Stand for something, not against anything
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Redefine success in business
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Redefine success in business
Bart Houlahan https://www.youtube.com/watch?v=Hayf9Ob9fiQ
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bimpactassessment.net / quick