Wachtell Lipton's "Corporate Governance Update: The Corporate Form for Social Good" explains generally what benefit corporations are, and provides an instructive overview of the designation, corporate structure, form, corporate purpose requirements, director duties, and ongoing public purpose-related reporting requirements of this alternative form of for-profit corporate entity with reference to Delaware law and as compared to a conventional corporation.
The informative memo makes a good case for socially conscious investors who want companies to pursue particular public purposes to invest in benefit corporations that are aligned with their goals in lieu of pressuring conventional companies to act like benefit corporations and pursue actions/behaviors that may be unaligned with their business purpose and thus potentially harmful to other investors:
Many traditional corporations can and do successfully pursue their purpose and profits while at the same time being responsible and committed citizens of their communities. That said, efforts by activists and stakeholders to compel traditional corporations to further public benefits in ways that do not fit their strategic plans can be counterproductive, reducing the ability of a company to focus on its business purpose and thereby harming the shareholders and stakeholders in the process. It is to be hoped that the investment option of benefit corporations (and certified B corporations) will help create cultural space for conventional corporations to pursue business-oriented strategies without expressly addressing social issues.
Access additional information & resources on our Benefit Corporations page. This post first appeared in the weekly Society Alert!