Another milestone for "Benefit Corporations" and "Certified Benefit Corporations" occurred in recent months when Laureate Education, Inc., the largest global network of degree-granting higher education institutions, with more than 87 institutions in 28 countries, became the first Benefit Corporation and Certified B Corporation to file a Form S-1 registration statement with the Securities and Exchange Commission and to go public.
The terms "Benefit Corporation" and “Certified B Corporation” are often confused. They have many similarities, but a few important differences. A Benefit Corporation is formed as a separate legal entity under state benefit corporation statutes. A Certified Benefit Corporation, however, does not refer to a particular form of legal entity. It instead refers to companies that are certified by B Lab, an independent nonprofit organization, as meeting rigorous standards of social and environmental performance, accountability and transparency. B Lab sets the standards for Certified B Corporation certification and may change those standards over time.
Last year Etsy, Inc., a handmade goods marketplace, became the largest "Certified B Corporation" to go public. The challenge for Etsy, however, is that current B Lab rules require a Certified B Corporation incorporated in a state that passes benefit corporation legislation to elect benefit corporation status within four years of the first effective date of the legislation, or two years of initial certification, whichever is later. Delaware's benefit corporation became effective August 1, 2013, so Etsy's deadline to become a Benefit Corporation is August 1, 2017.
Unlike Etsy, Laureate chose to adopt the public benefit corporation structure before its IPO. The 16-year-old company changed its redomicile to Delaware and became a Delaware Benefit Corporation in October 2015. Under Delaware law, public benefit corporations are required to identify in their certificate of incorporation the public benefits they will promote and their directors have a duty to manage the affairs of the corporation in a manner that balances the interests of the stockholders, the interests of those impacted by the corporation's conduct, and the specific public benefits identified in the certificate of incorporation. Laureate's public benefit, as stated in its certificate of incorporation, is to produce a positive effect (or a reduction of negative effects) for society and persons by offering diverse education programs delivered online and on premises operated in the communities that it serves.
Laureate's Form S-1 filing explains that, in addition to becoming a public benefit corporation, although not required by Delaware law, Laureate elected to have its social and environmental performance, accountability and transparency assessed against the proprietary criteria established by B Lab, an independent non-profit organization. As a result of this assessment, B Lab designated Laureate as a "Certified B Corporation."
Laureate continues to work through the process of going public, with the backing of private equity investor owner Kohlberg Kravis Roberts. In its most recent amendment to Form S-1 filed May 20, 2016, Laureate indicates that a number of prestigious global investment banks, including Credit Suisse, Morgan Stanley, and Barclays, will be leading the underwriting. If the Laureate IPO is successful, it could lead the way for other institutional and individual investors who want to invest in companies that generate good returns, but also make valuable contributions to society.