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.
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Other articles related to "benefit corporation, corporations, corporation, benefit corporations":
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... to enact legislation permitting the creation of B-corporations, a new kind of for-profit corporation legally structured to be socially responsible ... The B-corporation, or benefit corporation, is a new corporate form designed for for-profit entities that want to consider the good of the society and the environment in addition to profit in their decision making process ... Benefit corporations are legally protected from lawsuits charging a failure to consider only the maximization of shareholder value ...
Famous quotes containing the words corporation and/or benefit:
“It is truly enough said that a corporation has no conscience; but a corporation of conscientious men is a corporation with a conscience.”
—Henry David Thoreau (18171862)
“... were not out to benefit society, to remold existence, to make industry safe for anyone except ourselves, to give any small peoples except ourselves their rights. Were not out for submerged tenths, were not going to suffer over how the other half lives. Were out for Marys job and Luellas art, and Barbaras independence and the rest of our individual careers and desires.”
—Anne OHagan (1869?)