What is a Benefit Corporation
What is a Benefit Corporation?

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What is a Benefit Corporation?

One of the major responsibilities of a for-profit Corporation is to increase shareholder value. For most Corporations the pursuit of shareholder value is done without regard for specific benefits to the public. The only benefits that matter are those that benefit the shareholders, who are the owners of the Corporation. For-profit Corporations often face pressure to abandon social goals in order to increase their bottom line.

Nonprofit Corporations are formed to provide some kind of public benefit but may be restricted in their ability to raise capital when they need to grow.

In the last few years some states have created a new kind of for-profit Corporation which has a legal responsibility to include some kind of public benefit in their Corporate operating requirements. A Corporation of this kind is called a Benefit Corporation or a B Corporation.

Benefit Corporations are a hybrid between a for-profit and nonprofit Corporation. Operating capital is easier to raise for a Benefit Corporation and the Benefit Corporation is required to provide some kind of public benefit.

Benefit Corporations do not have any special tax breaks or benefits. Benefit Corporations are taxed just like any other Corporation is taxed.

To qualify as a Benefit Corporation, a Corporation must have an explicit social or environmental mission, and a legally binding fiduciary responsibility to take into account the interests of workers, the community and the environment as well as its shareholders. A Benefit Corporation must also publish independently verified reports on its social and environmental impact alongside its financial results. Some states require that the report must be filed with the Secretary of State.

Some examples of the specific public benefit that a Benefit Corporation must provide, among others, include:
  • Providing low-income or under served individuals or communities with beneficial products or services
  • Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business
  • Preserving the environment
  • Improving human health
  • Promoting the arts, sciences or advancement of knowledge
Currently a little over half of the states have laws that allow for the formation of a Benefit Corporation. It is probable that in the near future all states will have legislation which allows the legal creation of Benefit Corporations.

We can help you form a Benefit Corporation in any state which currently has provisions for Benefit Corporations.
CORPORATE GLOSSARY
 
Administrative Dissolution
Agent for Service of Process
Apostille
Apportionment
Articles of Incorporation
Articles of Organization
Assumed Name
At Will LLC
Authorized Shares
B Corporation
Benefit Corporation
Board of Directors
Business Dissolution
Business Entity
Bylaws
Certificate of Existence
Certificate of Status
Certified Copy
Close Corporation
Common Stock
Conversion
Corporate Bylaws
Corporate Name Reservation
Corporate Stock
DBA
Disregarded Entity
Dividends
ESOP
Excise Tax
Federal Tax ID
Ficticious Name
Foreign Qualification
Franchise Tax
General Partnership
Good Standing Certificate
Incorporator
Involuntary Dissolution
IRS Form 966
ITIN
Limited Liability Company
Limited Partnership
Liquidation
LLC
LP
Majority Shareholder
Meetings
Merger
Nexus
Non-Stock Corporation
Nonprofit Corporation
Obligated Member LLC
Organizer
Paid-in Capital
Paid-in Surplus
Par Value
Personal Service Corporation
Preferred Stock
Privilege Tax
Professional Corporation
Professional Service
Proxy
Registered Agent
Registered Office
Reporting Requirements
Revocation
S Corporation
Series LLC
Service Mark
Shareholder
Sole Proprietor
Stated Capital
Statutory Agent
Stock Certificate
Term LLC
Trade Name
Trademark
Trust
Trustee
Winding Up
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