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No, currently 27 states permit the formation of Benefit corporations. Many other states are considering Benefit corporation statutes, so expect this number to grow in the coming years.
|States that have adopted Benefit Corporation legislation|
New Hampshire (1/1/15)
|States in which legislation is pending or under consideration|
Yes, forming a Benefit corporation means your business must meet additional reporting and governance obligations. Depending on the state of incorporation you may be required to appoint a “Benefit Director” to ensure that the corporation meets its stated public benefit or purpose.
Benefit corporations must file a benefit report that uses a third-party standard (as offered by B Lab) to assess the company’s performance regarding to its public purpose(s). Most, but not all, states require that this report be completed annually and made available publicly.
If you are incorporated in a state that authorizes Benefit corporations, yes, you may change from a traditional corporation to a Benefit corporation.
If you are incorporated in a state that has not passed Benefit corporation legislation, you have the option of changing your current corporation's home state or forming a new corporation in a state that allows Benefit corporate status.
A Benefit corporation must be operated to achieve a general public purpose, as well as to generate profits for the shareholders (Colorado and Delaware require a specific public purpose). Most states define a general public purpose as one that has a material, positive impact on society or the environment, as measured against an independent third-party standard such as B Lab.
States that require a general public purpose also permit the corporation to adopt one or more specific public purposes. Among the specific public purposes that might be permitted are:
Yes, although there are many upsides to operating as a Benefit corporation, there are additional compliance and governance obligations. Most states require that publicly traded companies have a “Benefit Director” who is responsible for ensuring that the corporation meets its stated public purpose. Some states require all Benefit corporations to have a Benefit Director.
In addition, Benefit corporations must file a Benefit Report that uses a third-party standard (such as the one promulgated by B Lab) to assess the company’s performance with regard to its public purpose(s). Most states require that the report be completed annually and made available publicly. (Delaware is an exception. It requires a biennial report and does not require it to be publicly available.)
Yes, there are two sets of rules that apply when selecting a name for a Benefit corporation.
We have resources to help you understand your options.