Bloomberg Businessweek reports the launching of a new kind of corporation, starting in Maryland. Governor Martin O'Malley there has signed a law allowing the creation of "benefit corporations" that can indulge in public-purpose projects without undue fear of fear of shareholder lawsuits.
Many entrepreneurs applaud the concept, Bloomberg Businessweek advises, while corporate governance experts, of course, "worry about the rights of shareholders."
A decade ago Ben & Jerry's ice cream was sold to Unilever, a British-Dutch conglomerate, for $326 million, partly because Ben Cohen and Jerry Greenfield felt they had to take and distribute the largesse, even though they worried the new management might not cherish their social goals. Their legal concern was the financial interests of their shareholders.
But now entrepreneurs who want to think in more relational terms may find a new corporate age dawning. California and Vermont have "benefit corporation" bills pending and supposedly legislators in at least three other states, including New York, are considering them, BB reports.
We love the concept and don't see it as a threat to shareholders, so long as they know what they are signing on to. As a society, we could certainly do with a shift toward public purposes, or let's say, engagement purposes, in corporate activities. Yes, we know most corporations would say they exist to fulfill public purposes, but we mean public purposes that might not make them much money, but would gain them support and gratitude. Happily, interest in "so-called socially responsible businesses by investors and entrepreneurs" has been growing BB advises.
"Under the new Maryland law, benefit corporations must spell out their values in their charters, report annually on activities that benefit the public, and submit to third-party auditing of their societal impact. Becoming a benefit corporation, or shedding that status, would require approval of two-thirds of shareholders."
Such companies will have PR staffers, for sure.