Benefit Corporation Director Duties

Duties of Directors. The duties of a director of a benefit corporation are the same as those for a general corporation, except as they relate to the specific benefit corporation provisions concerning corporate purpose, accountability, and transparency.

A director of a benefit corporation, like a director of a general corporation, has a duty of care and a duty of loyalty. In order to satisfy the duty of care, a director must become fully informed. For directors of benefit corporations, this means considering the impact of decisions on a broad array of the corporation’s stakeholders, rather than just the interests of its shareholders. In order to satisfy the duty of loyalty, a director must put her own interests before the interests of the corporation. The duty of loyalty is the same for both benefit and traditional corporations.

Director Accountability Provisions. In order to ensure accountability for the broader purpose of benefit corporations, the statutory provisions list the considerations a board must take into account when making decisions. Some statutes provide a list that includes:

"the shareholders; (ii) the employees; (iii) customers; (iv) communities; (v) the local and global environment; (vi) the short-term and long-term interests of the benefit corporation, and (vii) the ability of the benefit corporation to accomplish its general public benefit purpose and any specific public benefit purpose. Other statutes require a tripartite balancing of the (i) stockholders, (ii) the interests of those materially effected by the corporation’s conduct and (iii) the specific public benefit adopted by the corporation."

Benefit Director Obligations. Some states require that a benefit corporation designate a “benefit director,” who must prepare the corporation’s benefit report. For a description of the Report, see here. A benefit director has the same duties with respect to the report that she has with respect to other actions as a director.


FAQs for Directors


The Public Benefit Corporation Guidebook