Becoming A Public Benefit Corporation PDF Download

In 2013, the Colorado General Assembly enacted H.B.13-1138, the Public Benefit Corporation Act of Colorado (PBCA). A Colorado public benefit corporation (PBC) must identify a public benefit purpose in its Articles of Incorporation. The directors, in managing the business and affairs of the PBC, must balance the pecuniary interests of the shareholders, the interests of those materially affected by the corporation's conduct, and the public benefits identified in the Articles of Incorporation. The Colorado General Assembly has amended the PBCA three times since it was enacted, most recently in 2017 and 2019. The 2019 amendments also made significant changes to the Colorado Business Corporation Act on which corporations formed under the PBCA are based, and the attachment to the article setting forth model provisions for Colorado PBCs includes those and other changes.B Lab Company has been promoting the benefit corporation concept since the mid-2000s as a means of supporting corporations meeting a corporate social responsibility theme. Whether the protections offered by the benefit corporation legislation was necessary or merely convenient has been a topic of debate. In June 2014 the U.S. Supreme Court decided the Hobby Lobby cases which held (in part) that profit maximization was not the only permissible corporate goal, even for a for-profit corporation. In 2015, Delaware Chief Justice Leo E. Strine, Jr., published a paper on SSRN discussing Delaware common law and the DGCL as it impacts the ability of directors to consider alternative constituencies apart from shareholder wealth maximization. This also impacts the consideration between whether a corporation desiring to focus on social responsibility in addition to profit should select a public benefit corporation format, amend its articles of incorporation to identify the additional purposes, or rely on the general statement in the articles "to conduct any lawful business."This paper has been updated to reflect the possible impact of Hobby Lobby and discusses Chief Justice Strine's paper in the section entitled "Why a Public Benefit Corporation Rather Than A Non-PBC?" and subsequent Colorado amendments.The paper also has appended a form addendum to the articles of incorporation which adopts and enhances the Public Benefit Corporation Act provisions of the Colorado Business Corporation Act. The PBCA provisions are identified with yellow highlighting and includes statutory references.