What is the Difference Between a Regular Corporation and a Benefit Corporation?
Recently we discussed the establishment of the Pennsylvania Benefit Corporation as a new legal business entity in Pennsylvania. To recap, a Benefit Corporation is a corporation committed to operating in a way that has a positive impact on both the environment and society. In today’s article we will discuss a few of the main differences between a Benefit Corporation and a traditional corporation.
The law that established the Benefit Corporation as a legal business entity states that the fiduciary duties of the directors and officers include duties not imposed on the directors and officers of a traditional corporation. The enhanced fiduciary duties and commensurate protection of a Benefit Corporation’s directors and officers include the following:
- The duty to create public benefit and consider nonfinancial interests, even in the event of a sale;
- Enhanced legal protection for directors and officers to allow them to consider the best interests of the work force, community, and environment when making decisions for the corporation; (This contrasts with the duties of directors in traditional corporations where the bottom line is the first priority.)
- Expanded shareholder rights to enforce the added fiduciary duty and standard of consideration;
- Super-majority (2/3) vote of the shareholders required to remove or lessen higher standards of directors and officers;
- Provides corporate opportunity to name and enforce pursuit of one or more public benefit purposes’
- Provides greater access to capital that current alternative approaches.
If you are interested in establishing a benefit corporation or modifying your existing corporation to the Benefit Corporation guidelines, the Scolieri-Beam Law Group, P.C. is here to help.
Located in western Pennsylvania, the experienced attorneys at Scolieri-Beam Law Group, P.C. can answer these and other business law questions, including helping you choose the right legal business entity to meet your goals. Contact us today at (412)765-0546 or info@scolierilaw.com.