A benefit corporation preserves a company's mission in the following ways:
- Introduces capital increases and management modifications
- Creates extra options when making choices about liquidation or selling
- Prepares companies to focus on their mission after going public
Full Answer
What are some examples of benefit corporations?
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- UNICEF – offers 5 benefits
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- Microsoft – offers 5 benefits
- Massage Envy – offers 5 benefits
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What is an example of a benefit corporation?
King Arthur is an example of a benefit corporation, a type of corporation that places social and environmental values on an equal footing with profits. Other well-known benefit corporations include outdoor gear retailer Patagonia and the crowdfunding service Kickstarter. Just what is a benefit corporation?
Can a benefit corporation go public?
Yes, the benefit corporation form was designed to protect the mission of a company when it goes public. In February 2017, Laureate Education, the largest degree-granting higher education institution in the world, became the first benefit corporation to go public with an Initial Public Offering (IPO).
What does benefit corporation mean?
Benefit corporations are for-profit corporations that need to consider stakeholders, morals, or missions in addition to making a profit for their shareholders. Nonprofits can't be benefit corporations, but they may create one.
What does a benefit corporation do?
A benefit corporation is a business entity with a dual purpose: making a profit and promoting the public good.
What is an example of a benefit corporation?
Some examples of government-provided public benefit corporations include transit systems, public libraries, and hospitals.
Who owns a benefit corporation?
The shareholders of a benefit corporation actually own the company as well as its assets. There are other significant differences between the two entities.
What is a specific benefit corporation?
"Specific benefit corporation" means a public benefit corporation that states in its articles a specific public benefit purpose it elects to pursue, but does not include a general benefit corporation that states in its articles a specific public benefit purpose it elects to pursue.
How is a benefit corporation different from a nonprofit?
In a nonprofit, there are no owners or shareholders, while a B corp has shareholders. While a nonprofit works toward a public good without the intent of turning a profit, a B corp is a traditional company in that shareholders expect a return.
Is Patagonia a benefit corporation?
A Certified B Corporation, Patagonia's mission is to build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis. Since 1985, Patagonia has dedicated 1 percent of sales each year to environmental causes.
Why would a company want to be a benefit corporation?
Benefit Corporations afford legal protection to companies that prioritize social and environmental values over shareholder returns. In other words, Benefit Corporation status allows directors and officers to balance financial and nonfinancial interests when making business decisions.
Why is a benefit corporation different than a traditional corporation?
Unlike a traditional corporation, a Benefit Corporation is a for-profit corporate entity type that is not solely profit-driven. A Benefit Corporation must have a beneficial social or environmental purpose and meet increased levels of accountability and transparency.
What is the difference between AB corp and a benefit corporation?
These terms are often used interchangeably, without taking their remarkable differences into consideration. While the term "B Corp" refers to a third-party certification, "Benefit Corporation" refers to an actual legal business structure.
What is a benefit corporation UK?
Certified B Corporations, or B Corps, are companies verified by B Lab to meet high standards of social and environmental performance, transparency and accountability.
What is a benefit corporation quizlet?
Benefit Corporation. Positive impact on society and the environment (people, profit, planet - triple bottom line) legally acknowledge consider the impact of their decisions on shareholders, workers, community and the environment. Impact on fiduciary duty. officers and directors still owe a fiduciary duty to ...
How do I set up a benefit corporation?
To register as a benefit corporation, you must file the Articles of Incorporation with the Secretary of State, along with the prescribed filing fees. As of now, you can form a benefit corporation in 27 states. However, more states are likely to enact the statute for benefit corporations in the coming years.
Operations
- But the King Arthur Flour Company is different from its major competitors, and not just because of its baking qualities. King Arthur is 100 percent owned by its employees, who share in profits and receive 40 hours of paid volunteer time each year. King Arthur sponsors school education programs and donates substantial sums to programs that combat hunger. It uses recycled pape…
Examples
- King Arthur is an example of a benefit corporation, a type of corporation that places social and environmental values on an equal footing with profits. Other well-known benefit corporations include outdoor gear retailer Patagonia and the crowdfunding service Kickstarter. How a Benefit Corporation Is Different
Benefits
- Just what is a benefit corporation? A for benefit 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. The officers and directors run the business, yet the shareholders can hold them accountable for the decisions they make. Shareholders h...
Purpose
- The difference between a traditional corporation and a benefit corporation is in its purpose. A traditional for-profit corporation's purpose is to make profits for shareholders. This means that corporate managers are judged based on the company's financial performance. They may face shareholder action if they make decisions that sacrifice profits to achieve nonmonetary goals. …
Effects
- Because they may sacrifice profits in order to achieve social goals, for-benefit companies may not be as popular with investors as traditional profit-centered corporations. Owners of benefit corporations may have to develop a strategy to attract investors that value contributions to social or environmental causes as highly as they value profits.
Certifications
- Another way to show that a business is focused on environmental and social goals is to apply for B corp. certification through the nonprofit organization B Lab. Certification is available to all types of businesses, including traditional corporations and LLCs. Some businesses, like King Arthur Flour Company and Greyston Bakery, are organized as benefit corporations and also are B Lab c…
Overview
In the United States, a benefit corporation (or in several jurisdictions including Delaware, a public-benefit corporation or PBC) is a type of for-profit corporate entity, authorized by 35 U.S. states and the District of Columbia, that includes positive impact on society, workers, the community and the environment in addition to profit as its legally defined goals, in that the definition of "best inter…
History
In April 2010, Maryland became the first U.S. state to pass benefit corporation legislation. As of March 2018, 35 states and Washington, D.C., have passed legislation allowing for the creation of benefit corporations:
Connecticut's benefit corporation law is the first to allow "preservation clauses", which allow the corporation's founders to prevent it from reverting to a 'For Profit' entity at the will of their shareh…
Differences from traditional corporations
Historically, U.S. corporate law has not been structured or tailored to address the situation of for-profit companies that wish to pursue a social or environmental mission. While corporations generally have the ability to pursue a broad range of activities, corporate decision-making is usually justified in terms of creating long-term shareholder value.
The idea that a corporation has as its purpose to maximize financial gain for its shareholders w…
Provisions
Typical major provisions of a benefit corporation are:
Purpose
• Shall create general public benefit.
• Shall have the right to name specific public benefit purposes
• The creation of public benefit is in the best interests of the benefit corporation.
Benefits
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 …
Public benefit corporation vs. certified benefit corporation
There is a difference between being filing as a public benefit corporation in a state, and being a certified benefit corporation also known as a B Corporation. B Corporations voluntarily promise to run their firm with social and environmental causes as a concern. To receive their certification from B Lab they must score a minimum of 80 out of 200 on a survey called the B impact assessment. Next, they will have to pass through an audit process. Finally, the firms wishing to r…
Taxation
A public benefit corporation is a legal entity that is organized and taxed as either an S corporation or C corporation. Founders will want to keep in mind that C-corporations experience a double tax associated with profits and again with dividends or payouts to shareholders. S corporations are a legal entity that escapes this double taxation but there are certain stipulations that an entity will have to consider before being able to file as an S corporation. If you are currently an S or C corp…
Possible incentives to change to a benefit corporation
Changing your status to a public benefit corporation allows the directors and founders the protection from being sued by shareholders for pursuing decisions that benefit the public but could hurt short term profits. Furthermore, firms that transition typically experience advantages in retaining employees, increasing their customer loyalty and attracting prospective talent that will mesh well into the company culture.