Delaware Legislation Update, April 18, 2013:
Delaware Governor Jack Markell joined members of the General Assembly to introduce benefit corporation legislation in the home state of American corporate law. B Lab has worked for the past 18 months with the Delaware Bar’s Corporations Law Council, the Secretary of State, the Chancery Court, and the legislature to develop legislation that is appropriate for Delaware corporate law and that meets the needs of the businesses and investors in the B Corp economy. This effort has included numerous opportunities for Delaware officials and corporate lawyers to meet with the CEO’s and founders of many Certified B Corporations and their investors.
The Delaware draft legislation embraces the critical idea of model benefit corporation legislation: a general public benefit purpose that requires the consideration of all stakeholders affected by the corporation’s conduct, not simply a narrow special purpose. Delaware’s recognition of the rise of a new kind of corporation whose end objective is to create a positive impact on society and the environment – and its effort to draft rigorous legislation with an overarching public benefit requirement - signals a seismic shift in corporate law. More than 900,000 business entities call Delaware their legal home, with 50% of all public companies and 2/3 of all Fortune 500 companies incorporated in Delaware.
Benefit corporation legislation has been enacted in 12 states and is under consideration in 20 states. Each state’s legislation differs somewhat from the model benefit corporation draft, but all of them, now including Delaware, meet the bar of providing for an overarching general public benefit obligation, accountability to all stakeholders, and impact transparency.
Thousands of visionary business leaders are building the foundation for a new economy with millions of high quality jobs and improved quality of life in communities around the world. To serve them, B Lab and the community of Certified B Corporations have worked to support legislation around the country to create a new kind of corporation called the benefit corporation.
Benefit corporation legislation not only gives businesses the freedom and legal protection to pursue the triple bottom line, but it gives individual citizens something positive for which to advocate.
According to a White Paper from a group of corporate attorneys, the benefit corporation is the corporate structure that best meets the needs of the growing number of entrepreneurs and investors who seek to use business as a tool to solve social and environmental problems.
Benefit corporations are exactly the same as traditional corporations except for three little things that make them game-changers: higher standards of purpose, accountability, and transparency. Benefit corporation laws have been enacted in 11 states and are moving forward in 16 others. Legislation has enjoyed overwhelming bi-partisan support -- including 12 unanimous votes -- because the legislation is 100% voluntary and costs states nothing.
Please visit benefitcorp.net to find resources for businesses and attorneys interested in learning more.
The Difference Between Benefit Corporations and Certified B Corps
Benefit Corporations and Certified B Corporations are often, and understandably, confused. Both are sometimes called B Corps. They share much in common and have a few important differences.
Certified B Corporation is a certification conferred by the nonprofit B Lab. Benefit corporation is a legal status administered by the state.
Benefit corporations do NOT need to be certified. Certified B Corporations have been certified as having met a high standard of overall social and environmental performance, and as a result have access to a portfolio of services and support from B Lab that benefit corporations do not.