Yesterday, Kentucky became the thirty-second state to enact legislation allowing Public Benefit Corporations (B-Corps). Famous B-Corps include Ben & Jerry's, Patagonia, and Kickstarter. B-Corps are for-profit companies that are allowed to balance profits and purpose, so long as the shareholders and board approve that purpose. B-Corps are not "non-profit" entities, but B-Corps do provide an avenue for businesses to dedicate profits or business activities to a distinct purpose. Numerous corporations already pledge some of their earnings to charitable organizations, but this is done voluntarily and the commitment may change annually. With B-Corps, the company and its shareholders are dedicated to a purpose or cause, which will likely be attractive in certain industries and to employees, particularly Millennials. As the market for top talent is perpetually tough, this could be a competitive advantage to attract tech-savvy employees.
Existing corporations can become B Corps, so long as the board of directors and the shareholders approve the modification (90% shareholder approval is required). There are certain limitations to the new laws that limit B-Corps, which must be discussed and considered before embarking on the B-Corps path. For additional information, please contact our office at (502) 423-1600 or visit us off the intersection of Hurstbourne Parkway and I-64.
For general information, please visit http://benefitcorp.net/.
J. Brandon Johnson and Sydney Race