Benefit corporations

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Benefit corporations

Benefit corporations

This made Italy the first country in the world to make this legal status available across its entire territory. The idea that a corporation has as its purpose to maximize financial gain for its shareholders was first articulated in Dodge v.

Ford Motor Company in This point was recently reaffirmed by the case eBay Domestic Holdings, Inc. Craig Newmark, et al. Thus a corporation may be unable to maintain its focus on social and environmental factors in a change of control situation because of the pressure to maximize shareholder value.

Of course, if a company does change ownership and the result is no longer in adherence to its initially described benefit goals, the sale could be challenged in court. Mission-driven businesses, impact investors, and social entrepreneurs are constrained by this legal framework, which is not equipped to accommodate for-profit entities whose mission is central to their existence.

Without clear case law, directors may still fear civil claims if they stray from their fiduciary duties to the owners of the business to maximize profit. By contrast, benefit corporations expand the fiduciary duty of directors to require them to consider non-financial stakeholders as well as the financial interests of shareholders.

In the rest of the world, the corporate law position is sometimes very different. In the UK, for example, the Community Interest Company ensures profit and purpose can both be prioritised. Purpose Shall create general public benefit.

Shall have right to name specific public benefit purposes e. The creation of public benefit is in the best interests of the benefit corporation. In addition, the laws provide companies the ability to consider factors other than the highest purchase offer at the time of sale, in spite of the ruling on Revlon, Inc.

Chartering as a benefit corporation also allows companies to distinguish themselves as businesses with a social conscience, and as one that aspires to a standard they consider higher than profit-maximization for shareholders.Benefit corporations must use a freely-chosen credible, comprehensive, independent and transparent third party standard to create their benefit report, but they do not need to be certified or audited by that third party standard.

Benefit corporations and Certified B Corporations are often confused. The B Corp Certification is a third-party certification administered by the non-profit B Lab, based in part on a company's verified performance on the B Impact Assessment. The benefit corporation is a legal structure for a business, like an LLC or a corporation.

B Corps and Benefit Corporations represent a new breed of conscious capitalism, combining higher purpose, accountability, and transparency where there’s . Public-benefit corporations are a specific type of corporation that allow for public benefit to be a charter purpose in addition to the traditional corporate goal of maximizing profit for shareholders.

Depending on the country they may also be known as crown corporations, statutory corporations, or government owned corporations having monopoly over a specific service or market. For one thing, Benefit Corporations can’t be held liable by courts for failing to place profits over everything else.

This is an important shift in law. The fear of shareholder litigation has driven many public-spirited businesses, most famously Ben & Jerry’s, to take the high bid rather than the high road in a corporate takeover fight. Benefit corporations differ from traditional C corporations in purpose, accountability, and transparency, but not in taxation.

The purpose of a benefit corporation is to create general public benefit, which is defined as a material positive impact on society and the environment, i.e. maximum positive externalities and minimum negative.

Public-benefit corporation - Wikipedia