What is a Benefit Corporation?

Benefit corporations are a new legal tool to create a solid foundation for long term mission alignment and value creation. It protects mission through capital raises and leadership changes, creates more flexibility when evaluating potential sale and liquidity options, and prepares businesses to lead a mission-driven life post-IPO.

Why Pass Benefit Corporation Legislation

Benefit corporation legislation gives more freedom to entrepreneurs, creates economic development at no cost to the state, and attracts investors. 34 states, including the District of Columbia, have already passed benefit corporation, and 12 did so unanimously.

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How to Pass Benefit Corporation Legislation

With over half the country now having adopted benefit corporation legislation future state adoption of the form is becoming less of a nice to have and more of a need to have. B Lab has assisted in passing the laws in all states that have enacted it and they are working on passing it in the majority of the remaining states. Learn more about the process of passing benefit corporation legislation, who the key stakeholders are, and how B Lab can help.

Legal Justification

Legislative Talking Points

The White Paper

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Common Misconceptions

Misconception: Benefit corporations get special tax treatment

Benefit corporation laws do not change or impact tax law in any way. A benefit corporation still must choose either C or S status like a traditional corporation, and are not taxed differently than other types of corporations.

Misconception: The benefit corporation structure is unnecessary

The only binding way to incorporate morals or mission into a corporate form without risking a shareholder lawsuit is by becoming a benefit corporation. Benefit corporations give entrepreneurs the legal protection & freedom to consider their stakeholders and incorporate their morals and mission into their business. One hundred years of case law have proven that benefit corporation legislation is necessary in order for a company to consider additional stakeholders.

Misconception: Benefit corporation legislation is designed for left-wing companies

Benefit corporation legislation is bipartisan with a 90% approval rating on all floor votes and has been passed unanimously in 12 states and D.C. The legislation specifically permits companies to include their specific mission in their articles of incorporation, which could focus on values of their choosing.

Misconception: Benefit corporation legislation increases regulation.

The benefit corporation is a completely voluntary corporate form administered by the state, akin to an LLC or a traditional corporation. The choice of model is entirely up to the business. It does not impact traditional corporations or impose additional requirements or regulation in any way, and benefit corporations do not have to be certified or audited by a third party.