Delaware Public Benefit Corporations 90 Days Out: Who's Opting In?

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Citation: Alicia E. Plerhoples (2014) Delaware Public Benefit Corporations 90 Days Out: Who's Opting In?. UC Davis Business Law Journal (RSS)
Internet Archive Scholar (search for fulltext): Delaware Public Benefit Corporations 90 Days Out: Who's Opting In?
Download: http://scholarship.law.georgetown.edu/facpub/1342
Tagged: benefit corporation (RSS), delaware (RSS)

Summary

Empirical research on 55 public benefit corporations that incorporated or converted in Delaware within 3 months of August 1, 2013, when Delaware General Corporate Law amendments allowing PBCs became effective:

  1. year of incorporation as proxy for corporate age (74% are new or early stage)
  2. industry (31% professional services; 11% technology; 11% education; 10% retail products)
  3. charitable activities (35% of these entities could conceivably have been incorporated as charitable nonprofits, based solely on whether stated mission falls clearly within exempt purposes listed in 501(c)(3).)
  4. identified specific public benefit (some do not, perhaps due to misunderstanding the statute)
  5. adoption of model legislation options not required by the Delaware statute (6 opt into 3rd party public benefit standards/evaluation, 5 into public benefit reporting)


145k legal entities incorporated in Delaware in 2012 and over 1m are actively domiciled there.

Theoretical and Practical Relevance

Future research suggestions:

  • compare Delaware PBCs with benefit corporations in states closer to model legislation
  • governance mechanisms employed to reflect stakeholders
  • PBC financing
  • PBC scaling/success/failure relative to other corporations
  • Will more major companies convert?
  • Will any PBCs IPO?
  • Legal questions about director actions to balance stakeholder interests
  • When first shareholder derivative suit brought by impact investor
  • PBC v non-profit decisions/impact