Benefit Corporation (B Corp)
A Benefit Corporation (B Corp) is defined as a type of for-profit corporate entity that intends to provide a positive impact on society, workers, the community and the environment while still attempting to make a profit for its shareholders.
In 2010, Maryland became the first U.S. state to pass benefit corporation legislation. As of February 2018, 34 states and Washington, D.C. have passed legislation allowing for the creation of benefit corporations.
Typical provisions of a benefit corporation are:
- Shall create general public benefit
- Shall have right to name specific public benefit purposes (e.g. 50% profits to charity)
- The creation of public benefit is in the best interests of the benefit corporation
- Directors’ duties are to make decisions in the best interests of the corporation
- Directors and officers shall consider effect of decisions on shareholders and employees, suppliers, customers, community, environment (together the “stakeholders”)
- Shall publish annual Benefit Report in accordance with recognized third party standards for defining, reporting, and assessing social and environmental performance
- Benefit Report delivered to: 1) all shareholders; and 2) public website with exclusion of proprietary data
Right of Action
- Only shareholders and directors have right of action
- Right of Action can be for 1) violation of or failure to pursue general or specific public benefit; 2) violation of duty or standard of conduct
Change of Control/Purpose/Structure
- Shall require a minimum status vote which is a 2/3 vote in most states, but slightly higher in a few states
Benefit corporations are treated like all other corporations for tax purposes.
UCS is with you every step of the way by providing the necessary forms to file with the Secretary of State as well as assist with drafting and submitting to the proper department. UCS also provides a registered agent office which is required in most states.
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