Articles

The Capital Markets and Benefit Corporations

In 2010, Maryland became the first state in the United States to adopt a benefit corporation statute, and since then 31 U.S. jurisdictions (along with Italy) have followed suit. In 2013, Delaware, the leading jurisdiction for incorporating in the United States, adopted its own version, authorizing “public benefit corporations.” In this short time frame, more than 3,600 companies have been formed as benefit entities, including more than 500 corporations in Delaware. The expanded purpose, accountability and transparency requirements associated with benefit corporation law are discussed in depth elsewhere in this issue. Briefly, benefit corporations directors must consider the interests of all stakeholders, in contrast to the directors of traditional corporations, whose primary duty is to shareholders. The directors of benefit corporations can and must balance the interests of all stakeholders when making important decisions, and even when selling the company. Benefit corporations must also be transparent as to how they address stakeholder concerns, so that shareholders, employees, customers, and other stakeholders can distinguish good companies from good marketing.

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Frederick H. Alexander, “The Capital Markets and Benefit Corporations,” Business Law Today (July 2016)

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