A for-profit corporate entity whose goals include making a positive impact on society. Benefit corporations explicitly specify that profit is not their only goal. Their activities may or may not differ much from traditional corporations. A traditional corporation may change to a benefit corporation merely by stating in its approved corporate bylaws that it is a benefit corporation. Note: A company can be both a Certified B Corp and benefit corporation. Benefit corporations self-report their performance while B Corps use the free B Impact Assessment to attain certification and are required to perform evaluations bi-annually to keep their certification.
directors' duties - directors of a PBC are tasked with managing the corporation's business and affairs in a manner that balances the stockholders' pecuniary interests, the best interests of those materially affected by the corporation's conduct, and the public benefit identified in its certificate of incorporation under “corporate purpose.”
PBCs are for profit entities that may gain financial advantage through subsidies from suppliers providing privileged terms, especially if the suppliers themselves are PBCs or socially conscious. Socially conscious investors or other parties may invest in PBCs while providing the PBC with more favorable terms. For example, the City of San Francisco provided benefit corporations with an advantage equivalent to a four percent discount on contract bids. Corporate social responsibility (“CSR”) spending is correlated with higher growth and profitability in the technology industry. - Duke Law
annual reporting obligations
PBC adoption does not necessarily equate to stakeholder consideration as legislation may be insufficient to prevent corporations from greenwashing. Not all state codes require companies to use an independent third-party standard to evaluate compliance with their goals, so PBCs have some autonomy in presenting, and potentially misrepresenting, their compliance to the public. Despite the reporting requirement, PBCs do not always comply. The only mechanism in place to ensure PBCs are properly balancing the public benefit they purport to promote is shareholder litigation for those holding at least 2% of a corporation’s outstanding shares. This structure does not provide sufficient assurance that PBC have incentives to pursue social missions effectively. See more on Duke Law Resource below.
Ethical concerns related to governance, organizational health and sustainability, worker equity and extraction, cooperation and openness, and trust and security are not explicitly specified in the tax code and will need to be clarified in bylaws and through organizational culture.
a benefit corporation is taxed as a C corporation by default. If the shareholder and stock requirements are met, a benefit corporation can make an S corporation election and take advantage of the tax planning options available to S corps.