INDUSTRIES & PRACTICES

thinking ahead

Benefit Corporations

MAKING A POSITIVE IMPACT.

Overview

As a firm, we value community, diversity, equal opportunity, human rights and social justice. This makes it particularly gratifying for us to work with companies and investors that – in addition to being for-profit – are also dedicated to having a positive social impact on the world. We formed the Benefit Corporations practice group in order to provide a wide range of services to benefit corporations and other socially responsible enterprises.

As implied by our Practice Group’s name, “benefit corporations” are a major part of our focus. Under applicable state law, these entities require their directors to balance the interests of stockholders with general and/or specific societal benefits.

Almost half of the states in the United States, and some international jurisdictions, allow for the creation of benefit corporations. In August 2013, Delaware’s “public benefit corporation” law went into effect, which we believe was a watershed event for socially responsible enterprises. We believe that benefit corporations will often be the optimal entity of choice for socially responsible entrepreneurs and investors.

Experience

Attorneys in our practice group assist socially responsible entrepreneurs and companies with:

  • Selecting the right form of entity for their socially responsible enterprise (“SRE”)
  • Choosing the right state of incorporation
  • Forming and setting up the SRE’s initial operations
  • Converting traditional corporations or other entities into SREs
  • Managing appraisal rights for non-approving stockholders in states that provide such rights upon entity conversion
  • Counseling the Board of Directors of the SRE
  • Selecting assessment standards for the SRE
  • Pursuing third party certification
  • Communicating with stockholders, investors, business partners and lenders

We also counsel investors and lenders about the risks and opportunities associated with investing in SREs. While we believe that such risks exist, they are sometimes overstated and, in our view, can typically be addressed through careful negotiation of affirmative and/or negative covenants that contractually govern the SRE’s actions in a manner consistent with the applicable SRE law.

Other variations of socially responsible enterprises served by our group include so-called L3C’s (low-profit limited liability companies), flexible purpose corporations and corporations governed by various constituency statutes.

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