Benefit corporations are subject to the same codes that govern traditional corporations except for the three major provisions of benefit corporation statutes concerning corporate purpose, accountability, and transparency, as well as the related issues of right of action and change of control, purpose, or corporate structure.

Below is a summary of the specific requirements regarding benefit corporation status.

Purpose                

• shall create general public benefit defined as a material positive impact on society and the environment, as assessed against a third party standard
• shall have right to name specific public benefit purposes (e.g. 50% profits to charity, carbon neutral, 100% local sourcing, beneficial product to customers in poverty)

Meeting the corporate purpose standards of benefit coporation legislation starts with including these statements in the corporation's articles of incorporation upon election of benefit corporation status.  For more guidance, click here. 

 

Accountability      

• directors and officers shall consider the effect of decisions on shareholders, employees, suppliers, customers, community, environment  (together the “Stakeholders”)
  •      have discretion to give priority to particular stakeholders consistent with general and any specific public benefit purposes        
  •      this standard of consideration is identical for operating and liquidity/sale decisions
• shall have an independent benefit director accountable for preparing a statement in the annual benefit report as to whether the board acted consistent with its obligation to create general and any named specific public benefit purposes, and considered effects of its decisions on stakeholders

Meeting the accountability standards of benefit coproration status is an ongoing process.  Guidance for directors on consideration of stakeholder interests is available here. 

Transparency       

• shall publish an annual benefit report that assesses its overall corporate social and environmental performance against a third party standard;
• the annual benefit report must be shared with all shareholders and made available to the public via its website, with the exclusion of proprietary data.

Guidance on selecting a third party standard that meets the statutory criteria can be found here, and a partial list of available third party standards can be found here. 

Right of Action

• only shareholders and directors have a right of action
• there is no third party right of action
• if the benefit corporation is a subsidiary, owners with >5% interest of the parent have right of action
• right of action can be for 1) violation of or failure to pursue or create general or specific public benefit; 2) violation of a duty or standard of conduct

Change of Control/Purpose/Structure             

• shall require 2/3 super-majority vote
• dissenters rights apply in those states in which they exist already