Benefit Corporations Come to Massachusetts

The Massachusetts legislature recently passed legislation authorizing corporations to file or reform as benefit corporations ( Corporations in Massachusetts may begin effectively becoming benefit corporations on December 1, 2012; however, they may already begin filing the proper paperwork to effect an incorporation/reformation into a benefit corporation.

In order to become a Massachusetts benefit corporation, a corporation must state in Article II of its articles of incorporation that (a) it is a benefit corporation, or (b) that it has the purpose of creating a general public benefit; it may also state specific benefits that the corporation intends to achieve. A Massachusetts benefit corporation must also designate in its articles of corporation one director to serve as a “benefit director”, whose job it is to oversee the achievement of the corporation’s purpose to achieve general public benefit (and specific benefits if necessary). This “benefit director” may not serve as the corporation’s president, treasurer, secretary, or any other officer positions; however, the “benefit director” may also be designated as a “benefit officer”, in order to serve the benefit director’s role at the officer level, but the “benefit officer” position is option — only a “benefit director” is required. Finally, Massachusetts benefit corporations must also submit an annual benefit report in addition to the regular benefit report, describing and assessing the corporation’s initiatives in achieving social benefit goals; the filing of the benefit report carries an additional filing fee.

According to B Lab, the non profit organization which provides an additional certification of any business as a “B Corp” (which is distinct from the legal “benefit corporation” entity), in addition to Massachusetts, eleven states have authorized benefit corporation. These twelve states are double the number of states that authorized benefit corporations when I last wrote about them in December 2011.