B-Corporation Certification vs. Legal Benefit Corporation
A Company can be certified as a B-Corp (or B-Corporation) by various private agencies such as B-Lab or it can be a legal Benefit Corporation entity, or it can be both. A Benefit Corporation certification is generally related to a rigorous model of social and environmental performance assessment as determined by a private organization; the certification is essentially a seal of approval verifying that the Company meets certain requirements. A legal Benefit Corporation is a new type of entity in the U.S. like a corporation, but with some significant legal differences.The Legal Benefit Corporation
In a Traditional Corporation, management must make all decisions in the best financial interests of the shareholders. A legal Benefit Corporation is a legal entity in which the Company decision-making may consider all stakeholders such as employees, the environment, the community and more, in addition to the financial interests of the shareholders. Namely, a Benefit Corporation balances the interests of the shareholders with a stated public interest and socially responsible and environmentally sustainable practices.3 Principles of B-Corps
Purpose, Accountability, and TransparencyPrinciple 1: Purpose
A Benefit Corporation must operate in a socially responsible and environmentally sustainable manner. Additionally, the B-Corp must seek to promote a public interest, as identified in it's Articles of Incorporation.Principle 2: Accountability
Another difference with Benefit Corporations is that the shareholder's have the legal right to force a Company (via lawsuit) to uphold the public interest identified in the Articles, and to operate in a socially responsible and environmentally sustainable manner.Principle 3: Transparency
Benefit Corporations are required to issue public reports which outline how the Company is working towards achieving it's stated public benefit, and must include an assessment of the overall social and environmental performance of the Company as compared against a 3rd party standard.Is a Benefit Corporation Right for Me?
Is your Company already taxed as a Corporation? Are your shareholders on-board with this change? Do you already make decisions based on the greater good? Is Benefit Corporation Status available in your jurisdiction?What happens if my state doesn't have legislation concerning benefits corporations?
Companies in States without benefit corporation legislation can still organize the Company as a benefits corporation through the corporate governance structure, but such organization may or may not be upheld by the Courts of that State.
Benefit Corporations: A Primer
by Thomas J. West on Feb. 01, 2017
Summary
A brief overview of: i. benefit corporations, ii. the differences between certification and legal organization, and iii. the primary benefits of each.
