The Model Legislation
B Lab recommends using the model legislation for the basis of any new legislation. B Lab and the pro-bono attorneys at Drinker Biddle & Reath are available to draft a version of the legislation tailored to your state’s specific corporate law. Using the model legislation has several important advantages:
Expertise. The Model Legislation was drafted by Bill Clark from Drinker, Biddle, & Reath LLP and has evolved based on input from state legislatures, state bar associations, Secretaries of State offices, Attorneys General offices, associations, nonprofit groups and businesses in the states in which the legislation has been passed or introduced. It reflects the expressed needs of business leaders and investors interested in using the power of business to solve social and environmental problems, and has been conformed to local corporate codes by local corporate attorneys.
Consistency. Using the model legislation ensures that your state remains consistent with the other states that have passed the legislation. This is particularly important for investors who rely upon this consistency to reduce their due diligence requirements when evaluating a company. The ability to recognize that a benefit corporation is the same in Illinois as it is in Florida allows the free market to function effectively.
Conformity. The model legislation has been drafted so that the existing corporation code applies to benefit corporations in every respect except those explicitly stipulated in the Model Legislation. This drafting approach avoids the potential legal and administrative issues that will arise in keeping a new corporate form in conformity to the corporation code as changes to the corporation code occur over time.
Economic Development. Only the model legislation has a built in economic development engine that opens up new markets for states by giving investors and social enterprise the tools they need to function effectively. By identifying benefit corporations separately from traditional businesses investors can easily identify them, which they could not do before. By requiring the production of a publicly available annual benefit report, which is assessed against a third party standard, not only are shareholders given the materials they need to enforce their rights, investors can quickly research benefit corporations and determine if the company matches the mission of their fund. This marketplace does not exist in our economy without the passage of benefit corporation laws. The best part, is that it does not require government oversight or government money to allow it to function. It is a true free market approach.
Note: Delaware passed benefit corporation legislation in July 2013. The new Delaware entity is technically called Public Benefit Corporation (or PBC), but will typically be referred to colloquially as benefit corporation. Click here to learn more about Delaware benefit corporation statute and how it compares to the model statute