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:
- year of incorporation as proxy for corporate age (74% are new or early stage)
- industry (31% professional services; 11% technology; 11% education; 10% retail products)
- 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).)
- identified specific public benefit (some do not, perhaps due to misunderstanding the statute)
- 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