Sustaining the Sustainable Corporation: Benefit Corporations and the Viability of Going Public

Citation: Matthew J. Dulac (2015) Sustaining the Sustainable Corporation: Benefit Corporations and the Viability of Going Public. Georgetown Law Journal (RSS)
Internet Archive Scholar (search for fulltext): Sustaining the Sustainable Corporation: Benefit Corporations and the Viability of Going Public
Download: https://georgetownlawjournal.org/articles/29/sustaining-sustainable-corporation-benefit
Tagged: benefit corporation (RSS), delaware (RSS)

Summary

Q1: "is there enough investor interest in public benefit corporations (PBC) to support an IPO?"

Yes, socially responsible investing is huge (10% of funds under management in US), socially responsible businesses have raised substantial capital, socially responsible business can be seen as a cost of doing business (eg marketing) in markets with socially responsible consumers. It is only a matter of time before a Delaware PBC IPOs.

Q2: "After a public benefit corporation goes public, its directors owe significant obligations to the corporation’s shareholders and constituents—obligations that might be in tension with one another. Thus, can a public benefit corporation legally be a public company under current Delaware law?"

Q3: "fearing the violation of their fiduciary duties, public benefit corporation directors may believe they are unable to defend against activist investors and hostile takeovers; thus, can a public benefit corporation survive as a public and independent company?"

To 2 and 3 the paper does not offer definitive answers, but basically argues that even without PBCs directors have sufficient protection, publicly traded LLPs and LLCs for which directors have no fiduciary duties are successfully traded, and investors are put on notice about activities of PBCs. In conclusion:

"Delaware law should only require that public benefit corporation disclosure be meaningful and let the invisible hand of the market do the rest."