why b corps matter

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Benefit Corporations What they are Why they matter How they are formed How are they treated

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B Corps are businesses for a new generation of entrepreneurs who desire to see business used as a force for good. By following triple bottom principles and a desire for societal impact, B Corps are changing the way success in business is defined.

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Page 1: Why b corps matter

Benefit Corporations

What they are

Why they matter

How they are formed

How are they treated

Page 2: Why b corps matter

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 Shareholder

Value

Benefit Corporations

20th Century

21st Century

Page 3: Why b corps matter

Also known as:

Benefit Corporations – general public benefit

Flexible Purpose Corporations – a single purpose

Maryland 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

Page 4: Why b corps matter

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

Page 5: Why b corps matter

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

Page 6: Why b corps matter

1,100+ B Corporations in 120 Industries in 40 Countries

Page 7: Why b corps matter

Currently there are 27 states with benefit corporation legislation on the

books

Benefit Corporations

Page 8: Why b corps matter

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

Page 9: Why b corps matter

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

Page 10: Why b corps matter

Certified B Corporations

Certified B Corporations – certified by non-profit B Lab

Similar to LEED certification for green building

Fair Trade certification for coffee and chocolate

USDA Organic for milk products

Page 11: Why b corps matter

Certified B Corporations v. Benefit Corporations

Comparisons

Page 12: Why b corps matter

I am inspired by Greyston Bakery

Yonkers, New York

Hires & trains previously incarcerated individuals

Page 13: Why b corps matter

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

Page 14: Why b corps matter

Redefine success in business

Page 15: Why b corps matter

Redefine success in

business

Bart Houlahan

https://www.youtube.com/watch?v=Hayf9Ob9fiQ

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bimpactassessment.net / quick

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Thank you!

[email protected]

@scottkregelcpa

(c) 215-783-9590