Benefit corporation. B-Corp. Articles of Incorporation.
Benefit Corporations. Times are changing. Today, more than ever before, enterprising entrepreneurs are setting a new stage and creating a work environment that suits their needs. The desire to combine corporate responsibility with social enterprise is at the forefront of many new business owners. Hence we have the benefit corporation. Twenty-three states, including California, New York, Delaware, and Pennsylvania have enacted laws which permit this new corporate form. The Benefit Corporation are for profit companies, which incorporate the features of non-profits. While taking into account a shareholders need for a return on their investment, benefit corporations also allow management to consider the corporation’s impact on the environment, the community, and its employees. Benefit corporations are generally formed in the same way as traditional corporations. However, there are a few differences. Benefit corporations are created for a specific public benefit purpose, for that reason there is more scrutiny attached to their formation and maintenance. The benefit corporation must be accountable and transparent, with regard to its benefit purpose. In some states, like California, an express notation must be included in the Articles of Incorporation, that state: “This corporation is a benefit corporation.”
Public Benefit Purpose.
If you choose to identify a specific public benefit purpose, while not required, you might consider including this specific purpose in your Articles of Incorporation, as well. Examples of a “specific public benefit” are: (a) preserving the environment, (b) providing low-income or underserved individuals or communities with beneficial products and/or services, (c) promoting economic opportunity for individuals or communities beyond the creation of jobs in the ordinary course of business, (d) improving human health, promoting the arts, sciences, or advancement of knowledge, (e) increasing the flow of capital to entities with a public benefit purpose, or (f) the accomplishment of any other particular benefit for society or the environment.
Oftentimes people confuse benefit corporations with Certified B-corporations. They are not the same. Benefit corporation, like other corporate entities, are created by state governments. The Certified B corporation status is a certification handed down by the nonprofit company called B-Lab. They charge an annual fee for certification. While a benefit corporation is not required to get certified, there may be benefits to certification. If one has acquired Certified B corporation status, they have overcome many hurdles and reached a high level of accountability, transparency, and performance.
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