Corporations are generally associated with maximizing profits rather than making societal benefit a high priority. Well think again. An emerging corporate structure called the benefit corporation is a corporation with a social conscience. A benefit corporation is required by law not only to create profits for shareholders but also to positively impact society. This social benefit mission must be incorporated into the benefit corporation's entire being, from the Articles of Incorporation to its directors' decision-making.
A benefit corporation is a for-profit entity that, like all for-profits, has a goal of generating profit for its shareholders. In addition to that goal, however, the benefit corporation must also articulate a clear business purpose that includes a commitment to effect a material social or environmental benefit. A benefit corporation's directors still carry the fiduciary duty to act in the best interest of the corporation, but unlike the traditional for-profit corporation, the directors must also consider the impact their decisions will have on stakeholders, which include shareholders, employees, customers, suppliers, the community, and the environment.
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Business Organization Updates, Nonprofit Law Updates
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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