It’s a new year in California, and the green agenda takes another step forward as two new types of stock corporations are created: the public benefit and the flexible purpose corporations. A corporation can file as one of these new types of corporate entities if part of the corporate mission is to improve society and the environment, and the corporation creates a “general public benefit” or “material positive impact on society and the environment.” For background, see last year’s blog on the draft legislation and the Secretary of State’s website.
Today, on the first day eligible to do so, 18 companies registered as a public benefit corporation.
Among the advantages some of these companies see in doing so are possibly greater access to venture capital and marketing opportunities, as well as protection from fiduciary liability where pursuit of social and environmental causes reduce corporate profits. It is also possible that the new legal entities will also set forth a path for preferential treatment under tax, government contracts, and environmental regulation.
Recent laws passed by the California Legislature have asked companies doing business in California to take on more environmental and social responsibilities in their global supply chain (see, e.g., anti-slavery, green chemistry)
The advocates of the legislation to create these two legal entities have promised that this is just the beginning as many laws and regulations will be needed in order "to transform mainstream business to pursue environmental and social goals as aggressively as they do financial ones."