If you are already registered as a C or S Corp, administrative costs are the necessary changes to your company`s incorporation documents. If you have not yet established a business, the filing fee is the same as when you founded as a C or S Corp in your state. Benefit Corporation status allows companies to opt out of shareholder primacy and opt for stakeholder governance. In stakeholder governance, a company is required to consider anyone who is materially affected by that company`s decision-making, such as employees, customers, local communities, society and the environment. The information on this page does not constitute legal advice and is provided for reference purposes only. Alternatively, private for-profit corporations and corporations can also be considered non-profit corporations, also known as PBCs, benefit corporations, or B Corps. Unlike traditional C-companies, whose primary interest is to maximize shareholder value, not-for-profit organizations balance the financial interests of stakeholders, the interests of those involved in and affected by the business (such as employees and customers), and the promotion of their intended charitable purpose. The purpose of the corporation and the non-profit service(s) provided for must generally be stated in the incorporation documents of the corporation. In addition, not-for-profit organizations are required to undergo audits and evaluations and to report on their progress in achieving their charitable purpose. Some states, such as Delaware, have recently facilitated the conversion of existing businesses to PBCs by amending their incorporation charters. Well-known examples of private PBCs include clothing brand Patagonia, ice cream maker Ben & Jerry`s, and crowdfunding website Kickstarter. A charity always has a winning goal, but it also has a broader charitable purpose: to have a significant positive impact on society and the environment.
Managers must work to achieve this goal, and so they have the flexibility to make decisions that balance profits with social causes and environmental responsibility. Shareholders typically judge a company`s well-being based on its long-term financial success, in addition to public perception and product quality, but in recent decades, quarterly business reports have led to a hyperconcentration on short-term profits. As a result, the perception that business leaders are legally required to maximize shareholder value has increased, although this is not the case.  Benefit corporation legislation ensures that a director is required to consider other public benefits in addition to profit, thereby preventing shareholders from using a decline in the value of the share as evidence of a dismissal or lawsuit against the corporation. The transparency provisions require performance companies to publish annual reports on their social and environmental performance using a comprehensive, credible, independent and transparent standard from third parties. However, few states have included provisions for the removal of meritocracy status or fines if companies do not publish performance reports in accordance with state laws.  Judges may review a performance report or a series of annual performance reports to determine whether the meritocracy has met its legal requirements for its general and specifically stated charitable purpose. Specific logistics and content requirements for performance reports differ slightly by state or province. To determine the exact requirements of your state/province, discuss it with legal counsel or contact the Secretary of State (in the United States). Starting a welfare company can help a company serve a social purpose without risking shareholder action to put social welfare above profit. Certification and reporting requirements help business leaders assess progress and set new goals. And at a time when so many people are trying to be authentic and sustainable, it helps you stand out from the crowd by demonstrating your commitment to your employees, your community, and the environment.
In Delaware and Colorado, tracking one or more specific services is required. What is a charitable corporation? A not-for-profit corporation has the same structure as a traditional for-profit corporation. Each has a board of directors, officers and shareholders who own shares in the company. Officers and directors run the business, but shareholders can hold them accountable for the decisions they make. Shareholders have several options to do so, including filing a lawsuit for shareholders. All deserving companies must prepare a performance report to meet transparency requirements. (In Delaware, it does not need to be made available to the public, nor does it need to use a third-party standard as a scoring tool. It is considered good practice to do both). Benefit Corporation`s laws vary somewhat from state to state, but in general, a Benefit Corporation must have a general purpose of advantage, which is set out in its regulations. A B company is formed by filing a settlement with the state – just like a traditional company. Illinois created a new type of company called « Benefit LLC, » making the state the first state to give limited liability companies the same opportunities offered to Illinois corporations under the state`s benefit companies act.   Once in place, directors have a duty to consider not only the interests of shareholders, but also the declared public interest (declared public benefits) and all other stakeholders in the company when taking action by management bodies.
A non-profit corporation is a corporation created to create social and public goods and to act responsibly and sustainably. A benefits corporation is a kind of for-profit business unit. In addition to making a profit, it takes into account society, workers, community and the environment before making business decisions. Originally implemented in Maryland in 2010, benefit companies are considered a new type of business structure. Currently, more than 40 states have proposed or passed laws recognizing meritocracy. In December 2015, the Italian parliament passed a law recognizing a new type of organization called Società Benefit, which was designed directly on the model of service companies in the United States. This made Italy the first country in the world to provide this legal status throughout its territory.      I am not aware of a single case in which directors are held liable for an actual business decision because they have taken into account non-shareholder interests or because they impose a general obligation to maximize profits and short-term value to shareholders.
As Professor Lynn Stout of Cornell Law School concludes an analysis of legal precedents in her award-winning book, which will be published shortly: « [t]he aximization of shareholder value is not a management obligation, it is a management decision. »   See Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173, 182–83 (Del, 1986) (« [a] The board of directors may consider different electoral districts in the exercise of its responsibilities, provided that shareholders receive rationally related benefits. »); TW Services, Inc.