Benefit Corporation
A benefit corporation, or in short-hand a B corporation, is a class of corporation required by law to create general benefit for society as well as for shareholders. Benefit Corporations must create a material positive impact on society, and consider how their decisions affect their employees, community, and the environment. Moreover, they must publicly report on their social and environmental performances using established third-party standards.
The chartering of Benefit Corporations is an attempt to reclaim the original purpose for which corporations were chartered in early America. Then, states chartered corporations to achieve a specific public purpose, such as building bridges or roads. Their legitimacy stemmed from their delegated charter, although they could still earn profits while fulfilling it.
Over time, however, corporations came to be chartered without any public purpose, while being legally bound to the singular purpose of profit-maximization for its shareholders. Advocates of Benefit Corporations assert that this singular focus has resulted in a variety of societal ills, including the thwarting of democracy, diminished social good, and negative environmental impacts.
In April 2010, Maryland became the first U.S. state to pass Benefit Corporation legislation. Hawaii, Virginia, California, Vermont, and New Jersey soon followed. Additionally, as of November 2011, Benefit Corporation legislation had been introduced or partially passed in Colorado, New York, North Carolina, Pennsylvania, and Michigan.
Benefit Corporation laws address concerns held by entrepreneurs who wish to raise growth capital but fear losing control of the social or environmental mission of their business. 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. v. MacAndrews & Forbes Holdings, 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 mere profit-maximization for shareholders.
Read more about this topic: Corporation
Famous quotes containing the words benefit and/or corporation:
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—Mary Catherine Bateson (b. 1939)
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—William Howard Taft (1857–1930)