how to form a b-corporation
Post on 07-Nov-2014
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A New Class of Corporation for a New Class of Entrepreneurs
Benefit Corporations
Mission-driven companies pursuing purpose and profit
WHAT: A LEGAL ENTITY
Achieved through incorporation - like a C-Corporation, LLC, or Non-profit
Similar to traditional for-profit but with additional legal requirements
Operate almost identically to a traditional for-profit (corporate formalities, required filings, etc.).
The difference is commitment to higher standards …
PURPOSE, ACCOUNTABILITY, TRANSPARENCY
Purpose: To create a general public benefit Right to name specific
public benefit purpose
Accountability: affirmative fiduciary duty to consider not only shareholders but also stakeholders
Transparency: Requires publication of Annual Benefit Report
HOW:
BUSINESS AS A “FORCE FOR GOOD”
B Corporations idea was sparked by the 40 million people, worldwide, who are driving the social entrepreneurship movement.
Social entrepreneurs solve social and environmental issues by using the power and scale of business.
WHO IS THIS FOR? NOT JUST SOCIAL ENTREPRENEURS
For anybody who wants to “do well by doing good”
Pursue dual missions of social purpose and profit
In making business decisions, consider not only shareholders, but ALSO stakeholders including employees, suppliers, communities, and environment
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THE “FOUNDING” B CORPORATIONS
First company to incorporate in CA as a benefit corporation
PATAGONIA®
“We define the quality of our company, in part, by the degree to which we can
reduce our impact on the environment.”http://www.patagonia.com/us/home
METHOD®
One of first companies in Delaware to register as a benefit corporation
“Greenskeeping.”
http://www.greystonbakery.com/social-mission/
GREYSTON BAKERY
First New York Benefit Corporation
“… force for personal transformation and community
economic renewal”
http://www.greystonbakery.com/social-mission/
WHY: CEMENTING & PROTECTING MISSION
Because social purpose or environmental impact are inherent in the business
To protect officers/directors who make decisions that put other priorities ahead of the financial “bottom line”
Electing benefit corporation adds affirmative duty to account for non-financial interests in pursuing mission
WHERE: 20 JURISDICTIONS SO FAR….
KNOW YOUR STATE’S B CORP STATUTE
Most states’ statutes stem from model legislation’s uniform requirements for purpose, transparency, accountability
Some states vary slightly, but in key ways
California v.
Delaware
B CORP VS. BENEFIT CORPORATION
“B Corp” certification is similar to a LEED certification for buildings or a FairTrade certification for coffee.
Benefit Corporation is a legal entity available through each state’s corporate law statutes. Organizational structure like
the LLC or C-Corp.
• CERTIFIED B CORPS
• More than 800 companies
• BENEFIT CORPORATIONS
• First available in 2010 in Maryland• Now close to 300 companies
nationwide have registered• CA: At least 85• Delaware: 17 on first day of
enactment (Aug. 1 2013).
Sources: http://socentlaw.com/2013/07/how-many-benefit-corporations-have-been-formed/; http://www.bcorporation.net/; http://www.triplepundit.com/2013/08/delaware-benefit-corporations/
TAX IMPLICATIONS?
Benefit Corporation is treated no differently than traditional for-profit corporation
May elect S-Corp under existing statute
But quite possible there will be tax implications down the road.
CHOOSING B CORP VS. NON PROFIT
Social enterprises can be structured as either a non-profit or a for-profit entity
Both share common social and environmental goals but they are accomplished through different means
Benefit corporations presume return on investment, while non-profits seek charitable donations to fund business practices.
ACCOMPLISH THE SAME WITH LLC?
Yes, you can always draft or amend an LLC operating agreement to incorporate benefit corporation provisions and purposes.
But there are benefits to choosing incorporation over the LLC structure.
And there is huge market differentiation potential with choosing the benefit corporation structure over a traditional for-profit.
WHAT’S NEXT?
Questions?Leave a comment in the section below!
http://www.mycorporation.com/
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