The Delaware Public Benefit LLC is available to entrepreneurs and investors seeking to do good while profiting. Public Benefit Corporations have been provided for under Delaware law since 2013. However, the law governing Delaware Limited Liability Companies was amended August 1st of 2018, so a little-known fact is that an LLC may elect to be a “Public Benefit LLC.” A Public Benefit LLC is a for-profit entity; however, in operating a Public Benefit LLC, the LLC’s management can consider social, economic and political considerations without violating its fiduciary duty to act in the best interests of the company.
A Public Benefit LLC may consider several factors—the effect of action on the company’s employees, a neighborhood or region in which the company operates, certain minority groups or special interest groups, environmental concerns stemming from corporate action or inaction, or the desire to avoid perceived mistreatment of a group of persons—without being in breach of its financial obligation to act in the best interests of the company.
An LLC wishing to elect Public Benefit status must include a Public Benefit Statement in its Certificate of Formation and cannot elect to terminate its status without a two-thirds vote of the members. In addition, the LLC’s limited liability company agreement should articulate in detail the “public benefits” that management may consider in operating the LLC. Clear articulation of public benefit factors provide the LLC with greater clarity in acting within the parameters provided in the formation document.
The Certificate of Formation for the Public Benefit LLC will need to contain the following:
Every two years, a Public Benefit LLC must provide its members with information regarding its advancement of the public benefit(s) it seeks to promote, which must include:
The advantage of a Public Benefit LLC comes largely in the way that it can be marketed. By formally electing the Public Benefit LLC status, members of the LLC show a level of commitment to the public benefit(s) selected and provide investors with a standard of expectations and guidelines. It is true that what is provided for in the statute governing a Public Benefit LLC could be accomplished through a standard LLC Operating Agreement. However, founders who choose a Delaware Public Benefit LLC add a formal qualification to their company—one that can be touted when seeking investors or with potential customers.
The annual fees for maintaining a Public Benefit LLC, after the first year, include our $50 Registered Agent Service fee and the $300 Delaware Franchise Tax, that franchise tax is typically the only tax paid to Delaware if not physically here in Delaware operating.
Harvard Business Services, Inc. can assist with the formation of the Public Benefit LLC, however currently our website does not have the option to create the entity online. To proceed please call us at 800 345 2677 ext 6900 or email email@example.com with any questions, it is our pleasure to assist!
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