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Delaware 'Public Benefit Corporation' Lets Directors Serve Three Masters Instead Of One
Key Excerpts from Article on Website of Forbes
Posted: August 12th, 2013
http://www.forbes.com/sites/danielfisher/2013/07/16/delaware...
[On July 17 Delaware] Gov. Jack Markell is scheduled to sign a law creating a new public benefit corporation where directors must balance the interests of the owners with those of employees, the general public and the environment. Delaware becomes the 19th state to pass such a law, but it may be the most important one since it is home to half of all publicly traded U.S. companies. Not that Ford Motor Co. or Intel are likely to avail themselves of this new corporate structure. Under the Delaware law, 90% of shareholders must approve a shift to benefit status. The law will likely be more popular with closely held firms like Etsy, the online marketplace for handmade products with more than $500 million a year in sales. It gives them a chance to declare a broader set of objectives than profit alone, and a legal structure to pursue them without risking lawsuits by disgruntled shareholders who might prefer a fatter dividend, say, than the comfort of knowing no endangered species were wiped out by their companys logging operations. Under the new Delaware law, the purpose of a public benefit corporation is to operate in a responsible and sustainable manner. Directors cant be sued for pursuing objectives that advance artistic, charitable, cultural scientific or technological goals. The benefit corporation movement has even formed the Sustainability Accounting Standards Board to come up with the equivalent of GAAP for the Birkenstock-wearing set.
Note: For more on this exciting development, see the Huffington Post article written by Delaware's governor at this link.
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