Back شركة المنافع Arabic Societat de Benefici i Interès Comú Catalan Benefit Corporation German Benefit corporation French Benefit corporation Italian ベネフィット・コーポレーション Japanese 공익법인 Korean Manfaat korporatsiyasi Uzbek 公益法人 Chinese
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Passed into law.
No existing law.
Bill failed a vote in the state's legislature.
In business, and only in United States corporate law, a benefit corporation (or in some states, a public benefit corporation) is a type of for-profit corporate entity whose goals include making a positive impact on society. Laws concerning conventional corporations typically do not define the "best interest of society", which has led some to believe that increasing shareholder value (profits and/or share price) is the only overarching or compelling interest of a corporation.[1] Benefit corporations explicitly specify that profit is not their only goal.[2] An ordinary corporation may change to a benefit corporation merely by stating in its approved corporate bylaws that it is a benefit corporation.[2]
A company chooses to become a benefit corporation in order to operate as a traditional for-profit business while simultaneously addressing social, economic, and/or environmental needs.[3] For example, a 2013 study done by MBA students at the University of Maryland showed that one main reason businesses in Maryland had chosen to file as benefit corporations was for community recognition of their values.[4] A benefit corporation's directors and officers operate the business with the same authority and behavior as in a traditional corporation, but are required to consider the impact of their decisions not only on shareholders but also on employees, customers, the community, and the local and global environment. For an example of what additional impacts directors and officers are required to consider, view the Maryland Code § 5-6C-07 – Duties of director. The nature of the business conducted by the corporation does not affect its status as a benefit corporation. Instead, it provides a justification for including public benefits in their missions and activities.
The benefit corporation legislation ensures that a director is required to consider other public benefits in addition to profit, preventing shareholders from using a drop in stock value as evidence for dismissal or a lawsuit against the corporation. Transparency provisions require benefit corporations to publish annual benefit reports of their social and environmental performance using a comprehensive, credible, independent, and transparent third-party standard. However, few of the states have included provisions for the removal of benefit corporation status or fines if the companies fail to publish benefit reports that comply with the state statutes.[5]
Although approximately 36 jurisdictions now authorize the creation of benefit corporations, outside of those jurisdictions there are no legal standards that define what constitutes a benefit corporation.[6] With jurisdictions that recognize this form of business, a benefit corporation is intended "to merge the traditional for-profit business corporation model with a non-profit model by allowing social entrepreneurs to consider interests beyond those of maximizing shareholder wealth."[2] In jurisdictions where regulations have not been enacted, a benefit corporation need not be certified or audited by the third-party standard. Instead, it may use third-party standards solely as a rubric to measure its own performance.[7]
Some research suggests a possible synergy between a benefit corporation and employee ownership.[8]
- ^ Pearlstein, Steven (September 6, 2013). "Businesses' focus on maximizing shareholder value has numerous costs". The Washington Post. Archived from the original on February 7, 2015. Retrieved December 3, 2018.
- ^ a b c Lee, Jaime (May 2018). "Benefit Corporations: A Proposal for Assessing Liability in Benefit Enforcement Proceedings". Cornell Law Review. 103 (4): 1075–1100. ISSN 0010-8847.
- ^ Bagley, Constance E. (2018). The Entrepreneur's Guide to Law & Strategy, fifth edition. Boston, MA: Cengage Learning, Inc. pp. 56–58. ISBN 978-1-285-42849-9.
- ^ Kincaid, Amy; et al. (January 1, 2013). "Maryland Benefit Corporation Act: The State of Social Enterprise in Maryland". Slideshare. Retrieved October 9, 2019.
- ^ Murray, J. Haskell (2022). "Enforcing Benefit Corporation Reporting". Transactions: The Tennessee Journal of Business Law (23): 505.
- ^ Cite error: The named reference
:8was invoked but never defined (see the help page). - ^ Kimbrell, Anna R. (2013). "Benefit Corporation Legislation: An Opportunity for Kansas to Welcome Social Enterprises". University of Kansas Law Review. 62: 549.
- ^ Kurland, Nancy (2018). "ESOP plus benefit corporations: Ownership culture with benefit accountability". California Management Review. 60 (4): 51–73. doi:10.1177/0008125618778853. S2CID 158057120.
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