In every state where benefit corporation law is in effect, you may incorporate a new benefit corporation or convert an existing business.
Do you want to know how to form a benefit corporation? In every state where benefit corporation law is in effect, you may incorporate a new benefit corporation or convert an existing business into a benefit corporation.
What Exactly Is a Benefit Corporation?
A benefit company, sometimes known as a B Corp, is a typical for-profit organisation that legally establishes a public benefit purpose as its primary business goal. Benefit companies must base their choices on having a beneficial social effect. They can’t restrict themselves to the well-being of their stockholders. They must instead address the well-being of all stakeholders, including employees, workers, and the community.
Benefit companies are becoming a popular kind of structure for businesses that want to give demonstrable public benefits in addition to generating a profit.
B Corp, like LEED and Fair Trade, is a sort of certification provided by a third party. This accreditation is issued by B Lab, a non-profit organisation that assesses a firm based on specified social and environmental characteristics. Companies want this accreditation because it adds credibility to their firm via a third-party examination.
Many states have implemented legislation to regulate benefit companies. Delaware similarly enacted laws to regulate benefit companies in July 2013. This was a significant step since Delaware is regarded as a favourable state for the formation of companies.
The Benefits of a Benefit Corporation
Regardless of the size of your company, you should think about transforming it into a benefit corporation. A increasing number of business lawyers are specialised in benefit companies.
Creating a B Corp provides the following benefits:
Differentiation: Providing social benefits helps your company stand out from the crowd.
Flexibility: It allows entrepreneurs and investors to pursue social agendas while generating a profit.
Liability Protection: Benefit corporations, like ordinary businesses, provide personal liability protection
Competitiveness: It provides you an advantage over your competitors by making your company more appealing to customers, employees, and investors.
Attraction of Talent: Benefit firms attract more personnel because of the good influence they have on the environment and society.
Attraction of Investment: Benefit companies are an appealing investment choice for both for-profit and nonprofit investors.
Societal Impact: B Corps provide the pleasure of making a good difference in society. They advocate the idea of conducting business in a manner that benefits the community.
Choosing B Corp status allows you to align your revenues with social objectives while retaining the liability protection benefits of a typical business.
How to Establish a Benefit Corporation
If the state of incorporation has enacted B Corp legislation, you may instantly form a new firm as a benefit corporation.
To convert an existing firm into a benefit corporation, the governing papers must be amended.
Most states need a supermajority vote of two-thirds of shareholders to modify the governing documents.
The modification must be filed with the state agency in the same way that any other change in the company structure would be. In this scenario, however, you must additionally include a declaration stating that your organisation is a benefit corporation.
To become a benefit company, submit the Articles of Incorporation with the Secretary of State, together with the required filing costs.
A benefit corporation may now be formed in 27 states. However, additional states are expected to pass benefit corporation statutes in the future years.
Certification is optional.
After incorporation, you may apply to B Lab for B corporation accreditation. This certification confirms that your organisation fulfils the stringent social and environmental responsibility and performance criteria. It should be noted that B Lab certification is not essential to establish a benefit company. Obtaining the accreditation, on the other hand, boosts your company’s reputation.
B Lab is a non-profit group that has been advocating for the passage of benefit corporation law in a number of states.
Making Your Startup a Public Benefit Corporation
By incorporating your firm as a public benefit corporation, you may integrate public good in your company charter while still producing income for your shareholders.
There are around 4,000 public benefit businesses in the United States, including well-known brands such as This American Life, Kickstarter, and Patagonia. A rising number of companies are opting to establish themselves as public benefit organisations.