This article answers common questions asked by people about public benefit corporations.
What is a public benefit corporation?
A public benefit corporation (PBC) is a type of corporate structure that allows a company to pursue both financial and social or environmental goals. PBCs are required to consider the impact of their decisions on all stakeholders, including shareholders, employees, customers, and the community.
How does a public benefit corporation differ from a traditional corporation?
A traditional corporation is primarily focused on maximizing profits for its shareholders. In contrast, a PBC is required to consider the impact of its actions on all stakeholders, and its corporate charter includes a specific public benefit purpose. PBCs are also subject to additional reporting and transparency requirements.
What is the purpose of a public benefit corporation?
The purpose of a PBC is to use its business as a means to address social or environmental challenges. PBCs are required to have a specific public benefit purpose, which could include promoting health, preserving the environment, advancing education, promoting the arts, or any other lawful purpose that is intended to benefit the public.
Can a public benefit corporation be profitable?
Yes, a PBC can be profitable. However, the pursuit of profit cannot be the sole or primary focus of the company. PBCs are required to consider the impact of their decisions on all stakeholders, including shareholders, employees, customers, and the community.
Who can start a public benefit corporation?
Anyone can start a PBC, provided they meet the legal requirements for forming and operating a corporation in their jurisdiction.
How do I form a public benefit corporation?
To form a PBC, you will need to follow the steps for forming a corporation in your jurisdiction, which may include incorporating your business, drafting articles of incorporation, and obtaining any necessary licenses or permits. You will also need to include language in your articles of incorporation that specifies your public benefit purpose.
What are the responsibilities of the board of directors in a public benefit corporation?
The board of directors of a PBC has the same responsibilities as the board of directors of a traditional corporation, including overseeing the management of the company, setting strategic direction, and ensuring compliance with legal and ethical standards. In addition, the board of directors of a PBC is required to consider the impact of their decisions on all stakeholders, including shareholders, employees, customers, and the community.
Can a public benefit corporation pay dividends to shareholders?
Yes, a PBC can pay dividends to shareholders. However, the pursuit of profit cannot be the sole or primary focus of the company, and the board of directors must consider the impact of their decisions on all stakeholders.
Can a public benefit corporation issue stock?
Yes, a PBC can issue stock. However, the board of directors must consider the impact of any stock issuances on all stakeholders.
Can a public benefit corporation be sold or acquired by another company?
Yes, a PBC can be sold or acquired by another company. However, the board of directors must consider the impact of any sale or acquisition on all stakeholders, and the public benefit purpose of the PBC must be preserved in any sale or acquisition.
How is a public benefit corporation taxed?
A PBC is taxed in the same way as a traditional corporation. However, some PBCs may be eligible for tax benefits or incentives if they meet certain criteria, such as meeting specific social or environmental goals.
Can a public benefit corporation lobby or engage in political activity?
A PBC can lobby or engage in political activity, provided it is consistent with its public benefit purpose and does not violate any laws or regulations. PBCs are subject to the same restrictions on lobbying and political activity as traditional corporations.
How is a public benefit corporation held accountable for meeting its social or environmental goals?
PBCs are required to report annually on their social and environmental performance, including their progress toward meeting their public benefit purpose. These reports must be made publicly available and must be audited by an independent third party. In addition, PBCs are subject to shareholder lawsuits if they fail to pursue their public benefit purpose.
Can a public benefit corporation change its purpose or mission?
Yes, a PBC can change its purpose or mission, provided it follows the necessary legal procedures and obtains the approval of its shareholders.
Can a public benefit corporation operate in any industry or sector?
Yes, a PBC can operate in any industry or sector, provided it complies with all applicable laws and regulations.
Can a public benefit corporation have employees or volunteers?
Yes, a PBC can have employees or volunteers, just like any other business.
Can a public benefit corporation partner with other organizations or businesses?
Yes, a PBC can partner with other organizations or businesses, provided the partnerships are consistent with its public benefit purpose and do not violate any laws or regulations.
Can a public benefit corporation be international in scope?
Yes, a PBC can be international in scope, provided it complies with all applicable laws and regulations in the countries where it operates.
Are there any limitations on the activities of a public benefit corporation?
A PBC is subject to the same legal and regulatory requirements as a traditional corporation, and it must also adhere to its public benefit purpose. In addition, a PBC may be subject to additional reporting and transparency requirements, and it may be subject to shareholder lawsuits if it fails to pursue its public benefit purpose.
Can a public benefit corporation be dissolved or terminated?
Yes, a PBC can be dissolved or terminated, just like any other corporation. The process for dissolution or termination will depend on the specific laws and regulations of the jurisdiction in which the PBC is incorporated.