Benefit Corporations - Essay Example

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It assumes full legal responsibility on the impacts it is likely to have on the society as well as the environment apart from being a profitable…
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Benefit Corporations
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Benefit Corporation Benefit Corporation refers to a form of corporate structure that is recognized some of the governments in the United States. It assumes full legal responsibility on the impacts it is likely to have on the society as well as the environment apart from being a profitable venture. Some of the states in which Benefit Corporation has become fully operational include New Jersey, Oregon, Delaware, Nevada, Massachusetts, Louisiana, South Carolina, New York, Pennsylvania, Maryland, Illinois, Rhode Island, Utah, Vermont Washington D.C and West Virginia. Benefit Corporations differ from other normal corporations based on the aspects of transparency in their operations, accountability to the state and specific purposes (Overton, et. al, 76). However, when it comes to taxation, there is no difference as they are all taxed in a similar manner.
Benefit Corporations pursue a wide goals aimed at promoting the welfare of the society around it beside the profit-making motive. This separates them from other corporations that only focus only on maximizing profits to benefit the shareholders. The benefit corporations as opposed to other corporations are in a position to increase their fiduciary duty of their directors so as to have them consider non-financial stakeholders while at the same time their financial interests.
Benefit Corporations have a number of provisions based on their purpose, accountability, transparency and right of action. The purpose of a benefit corporation to create a general public benefit. The directors are fully accountable to all the stakeholders of the corporation. Transparency in benefit corporations is ensured through publishing of annual Benefit Report that is delivered to all the stakeholders through the public website and circulars to all shareholders. The shareholders as well as the directors of Benefit Corporations have the right of action against violation of any of their duties. The structure of a benefit corporation is composed by a minimum status vote which is mainly a 2/3 in most of the states. Some of the benefits of a Benefit Corporation besides the general public benefit include improvement of human health, increasing the flow of capital to public entities to ensure proper benefit, preservation of the environment, promotion of economic empowerment to communities and individuals and provision of low-income individuals or communities with beneficial products and initiatives.
A case of Benefit Corporation- Patagonia
Patagonia is among the first corporations to be registered in the state of California as a Benefit Corporation. Patagonia started off as a small company dealing with manufacturing of climbing tools and other sport equipment. The corporation is focused on building a company that will last for a period over 100 years. It believes that being Benefit Corporation, will offers it a legal framework that will enable it remain mission-driven throughout its lifetime.
The Mission Statement of Patagonia is, “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” The corporation dedicates 1% of all its sales on donations to hundreds of grassroots environmental groups operating all over the world. The careers available in this form of Benefit Corporation include sales and marketing of the companies, products and accountants to be in charge of the company’s finance. The type of Benefit Corporation that will be applicable in a business major is a manufacturing corporation such as Patagonia.
Work Cited
Overton, George W, and Jeannie C. Frey. Guidebook for Directors of Nonprofit Corporations. Chicago, Ill: American Bar Association, Section of Business Law, 2002. Print. Read More
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