The Delaware Public Benefit Corporation
At Comar Law we’ve been fortunate to work with many clients seeking to create impact. Now, such ventures have access to a powerful corporate form: the Delaware Public Benefit Corporation (“PBC”).
The Delaware PBC is a new corporate form that was authorized in August 2013. It amends the Delaware Corporate Code to provide for a new type of corporation that is not exclusively focused on profit. Specifically, the PBC must “be managed 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 or public benefits identified in its certificate of incorporation.” Del. General Corporations Law, section 362.
The PBC is required to issue a report every two years explaining to its stockholders how the company has promoted its identified public benefit and the best interests of those materially affected by the corporation’s conduct. Del. General Corporations Law, section 366.
Stockholders may also file derivative actions against the company to require it to provide its public benefit. Del. General Corporations Law, section 367.
The addition of Delaware as a state offering benefit corporation legislation permits entrepreneurs to experiment with new socially conscious corporate forms while also providing the comfort and security of Delaware law to potential investors. The Delaware PBC should be seriously considered as an alternative to benefit corporation legislation offered by other states.