public benefit photo

What’s a Public Benefit Corporation?

The Public Benefit Corporation, or PBC, is a newer type of entity that’s gotten a lot of buzz in the last few years. The PBC differs from a standard corporation in that it exists to serve a purpose beyond maximization of profits for its shareholders. This can be a good option for civic-minded entrepreneurs, or for companies that want to serve the public without going the nonprofit route.

The PBC is a very new structure, and many states have yet to recognize it as a legal entity. Maryland passed the first law recognizing PBCs in 2010, and other states have since followed. One high-profile PBC is Method, a manufacturer of soap and other cleaners, which focuses on environmental sustanability when producing its products. A standard c-corporation would be limited in pursuing this goal, since the corporation’s highest duty is to produce maximum return for its shareholders.

If you want to run a business that makes money and does good for society, a PBC may be a good option. Keep in mind that, since the PBC is such a new structure, many states don’t yet provide for formation of a public benefit corporation within their borders.

According to benefitcorp.net, the following 31 states have passed legislation allowing the formation of PBCs:

Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Hawaii
Idaho
Illinois
Indiana
Louisiana
Maryland
Massachusetts
Minnesota
Mississippi
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New York
Oregon
Pennsylvania
Rhode Island
South Carolina
Tennessee
Utah
Vermont
Virginia
West Virginia

An additional 7 states are in the process of trying to pass such legislation:

Alaska
Georgia
Iowa
Kentucky
Michigan
Ohio
Oklahoma

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