On January 23, 2013, the Pennsylvania Benefit Corporation Act (the Act) became effective. The Act authorizes a new type of for-profit business corporation known as a benefit corporation. Pennsylvania is now one of 12 states that have passed laws creating benefit corporations.
A. Benefit Corporations under the Pennsylvania Act. A fundamental difference between benefit corporations and standard business corporations is that directors of benefit corporations are required to consider the effects of corporate actions on the interests of a number of different groups, as referred to in Section B.3 below, in addition to shareholders. In return, benefit corporations may receive greater protection to pursue sustainable business goals and to maintain their business purpose over time, as well as a way to differentiate their business and transparently report on their social and environmental performance. However, unlike the corporation laws of many other states, under Section 1715 of the Pennsylvania Business Corporation Law the directors of standard business corporations, in determining the best interests of a corporation, may consider, to the extent they deem appropriate, the effects of any corporate action on any groups affected by such action, including shareholders, employees, suppliers, customers, creditors and the communities in which there are establishments of the corporation, as well as considering “all other pertinent factors.” Additionally, directors of Pennsylvania standard business corporations are not required to regard the interests of any particular group affected by such action as a dominant or controlling interest or factor. As a result, persons who might consider establishing a benefit corporation should, as set forth in Section D.3 below, determine whether the goals they seek to achieve might also be accomplished by using a standard Pennsylvania business corporation, with more flexibility and fewer restrictions.
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