What Are My Liabilities?

Benefit corporation status does not change the duties of directors; instead, it expands the set of constituencies to be considered in making decisions. For a discussion of director duties, click here. In essence, the benefit corporations attempt to limit director liability by protecting board decisions that include consideration of the interests of groups other than stockholders. Thus, in a benefit corporation a director cannot be liable simply for taking into account social or environmental factors when making a decision. In contrast, such considerations could lead to liability under traditional corporate law.

On the other hand, the benefit corporation statutes are drafted to limit director liability for failing to properly balance or consider these other constituencies. The statutes specify that only stockholders with a certain minimum amount of stock may challenge the balancing, and, most importantly, allow for there to be no monetary liability for directors for doing so when they otherwise satisfy their duties of care and loyalty. As a result of these provisions, lawsuits attempting to hold directors accountable for public benefit must be brought by stockholders in the form of requests for injunctive relief, that is, by lawsuits asking the board to reconsider the benefit in question, rather than by lawsuits seeking monetary damages. 

 

FAQs for Directors

 

Guide to Board Room Decision Making

 

The Public Benefit Corporation Guidebook