Yesterday, Delaware Governor Jack Markell signed Senate Bill 47, creating a new corporate form called the public benefit corporation. Delaware is the 19th state to enact benefit corporation legislation, which enables business leaders to consider public interest and societal impact in addition to profit when making business decisions. Delaware public benefit corporations must identify one or more specific public benefits in their certificate of incorporation, which include but are not limited to, artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific and technical.
The founders of B Lab, a nonprofit organization dedicated to using the power of business to solve social and environmental problems, believe this legislation has unparallel implications:
“The benefit corporation legal structure is a new and useful tool for everyone. For policy makers and the public interest, it combats the plague of short termism. For business leaders, it helps attract the best talent and turn customers into evangelists. For customers, it offers greater transparency to protect against pretenders. For employees, it promises higher quality jobs where they can bring their whole selves to work every day. And for investors, it mitigates risk, reduces transaction costs, creates additional rights to hold management accountable, and accelerates the growth of a big market opportunity to meet the needs of people who want to invest to both make money and make a difference.”
Delaware corporations are eligible to form or transform into public benefit corporations beginning August 1, 2013.
- Delaware.gov: http://news.delaware.gov/2013/07/17/governor-markell-signs-public-benefit-corporation-legislation/
- B Corporation Blog: http://www.bcorporation.net/blog/today-marks-a-tipping-point-in-the-evolution-of-capitalism
- Wall Street Journal: http://blogs.wsj.com/cfo/2013/07/17/a-softer-side-for-delaware-corporations/