In March 2011 the New Jersey legislature enacted an amendment to the BCA to allow the formation of “benefit corporations” (a.k.a. “B” corporations). Benefit corporations are established and structured similarly to ordinary for-profit corporations, except that the law permits benefit corporations to include in their charter corporate purposes that provide a public benefit in addition to pure profit-making activities. This gives freedom to directors and officers of benefit corporations to use corporate resources to effect social change without fear of violating the normal duties of officers and directors to maximize returns on investment; in fact, under the statute shareholders are permitted to bring derivative suits on behalf of the corporation for failure to pursue the corporation’s public benefit purpose.
Benefit corporations are required to provide a general public benefit, defined as “a material positive impact on society and the environment by the operations of a benefit corporation through activities that promote some combination of specific public benefits.” In addition, the certificate of incorporation of benefit corporations must identify a specific public benefit purpose, which can include, in addition to the catchall “accomplishment of any other particular benefit for society or the environment,”: (i) providing low-income individuals or communities with beneficial products or services; (ii) promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business; (iii) preserving the environment; (iv) improving human health; (v) promoting the arts, sciences or advancement of knowledge; and (vi) increasing the flow of capital to entities with a public benefit purpose.
Benefit corporations must have one director designated as a “benefit director,” who is responsible for distributing to shareholders an annual narrative report on the corporation’s achievement of its benefit purpose, and a “benefit officer,” who is authorized to direct the corporation’s resources to carry out the corporation’s public benefit purpose.
Benefit corporations do not receive tax treatment different from normal for-profit corporations.
Due to the relatively recent inception of benefit corporations in New Jersey and elsewhere, it is premature to determine whether such entities will become popular vehicles for effecting social change, or the legal or business implications and obstacles that may be encountered by these new business entities.
N.J. Stat. § 14A:18-1 et seq.