On November 27, 2017, Wisconsin started to allow businesses to be “benefit corporations” as a business entity thanks to the new corporate statutory Chapter 204. A benefit corporation is a corporation formed in accordance with ch. 180 that states its articles that it is a benefit corporation and has a purpose of creating general public benefit. An existing business corporation may become a benefit corporation under this chapter by amending its articles so that they contain, in addition to the requirements of s. 180.0202, a statement that the corporation is a benefit corporation
According to the statute, “general public benefit” means “a material positive impact on society and the environment by the operations of a benefit corporation taken as a whole, through activities that promote some combination of specific public benefits.” The company can also specifically state what their specific public benefit shall be, but that does not limit the obligation of a benefit corporation to create general public benefit.
“Specific public benefit” includes all of the following:
- Providing low-income or underserved individuals or communities with beneficial products or services.
- Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business.
- Preserving the environment.
- Improving human health.
- Promoting the arts, sciences, or advancement of knowledge.
- Increasing the flow of capital to entities with a public benefit purpose.
- The accomplishment of any other particular benefit for society or the environment
Directors and officers of a corporation has the duty to the corporation to make decisions in ways that he or she believes to be in the best interests of the corporation and its shareholders. In addition to considering those, they may look at the effects of any action on:
- The effects of the action on employees, suppliers and customers of the corporation.
- The effects of the action on communities in which the corporation operates.
- Any other factors that the director or officer considers pertinent.
But now, officers and directors of a benefit corporation, in considering the best interests of the benefit corporation, shall consider the effects of any action or inaction on all of the following:
- The shareholders of the benefit corporation.
- The employees and workforce of the benefit corporation and its subsidiaries and suppliers.
- The interests of customers as beneficiaries of the general public benefit or specific public benefit purposes of the benefit corporation.
- Community and societal factors, including those of any community in which offices or facilities of the benefit corporation or its subsidiaries or suppliers are located.
- The local and global environment.
- The short-term and long-term interests of the benefit corporation, including benefits th
- at may accrue to the benefit corporation from its long-term plans and the possibility that these interests may be best served by the continued corporate independence of the benefit corporation.
- The ability of the benefit corporation to accomplish its general public benefit purpose and any spe
cific public benefit purpose.
They may also consider any of the following:
- The resources, intent, and conduct of any person seeking to acquire control of the corporation.
- Any other pertinent factors or the interests of any other group that is deemed appropriate.
For those who haven’t taken Statute Reading 101, “shall” means they directors and officers are required to look at those items, but “may” means they have the option, but it isn’t necessary.
This does not mean the officers and directors in a benefit corporation should make decisio
ns against or ignore profit and other financial considerations. After all, benefit corporations remain for-profit business entities – not a non-profit or charity.
The board of directors of a benefit corporation also must have one director who shall be designated the “benefit director.” That benefit director should be given the duty to monitor compliance with the benefit corporation’s public benefit mission. However, interestingly, the statute doesn’t actually seem to do so. Instead, the statute says, “The articles or bylaws of a benefit corporation may prescribe additional qualifications of the benefit director not inconsistent with this subsection”, but it never says what the actual duties of the director are.
Finally, a benefit corporation shall annually provide its shareholders, within 30 days of the end of the benefit corporation’s fiscal year, with a statement as to the benefit corporation’s promotion of general public benefit or any specific public benefit identified in its articles. The statement shall include all of the following:
- The objectives the board of directors has established to promote general public benefit or any specific public benefit.
- The standards the board of directors has adopted to measure the corporation’s pro
- gress in promoting general public benefit or any specific public benefit.
- Objective, factual information based on the standards regarding the benefit corporation’s success in meeting the objectives in promoting its stated public benefits and interests.
- An assessment of the corporation’s success in meeting the objectives in promoting its stated general public benefit or any specific public benefit.
The short story, yes, you can be a benefit corporation, and you have some additional requirements if you want to show that you have a societal good in mind. However, what exactly your benefits director should be doing seems to be up to you.