The most recent member of the family of Delaware corporate entities is the Delaware Public Benefit Corporation, also known as a Benefit Corporation or B Corporation.
The Delaware Public Benefit Corporation came into existence on August 1, 2013.
We have assisted business owners with incorporating many newly-established Delaware Benefit Corporations. In doing so, we have learned a few things.
For example, Delaware allows for the use of the following corporate indicators for General Corporations, Close Corporations, Non-Profit Corporations as well as Benefit Corporations:
In addition, Delaware Benefit Corporations also have the option of using the following corporate indicators:
However, the endings Public Benefit Corporation, PBC and P.B.C. are not interchangeable and cannot be used for General Corporations, Close Corporations, or Non-Profit Corporations in Delaware.
Another issue that entrepreneurs may eventually run into with a Delaware Benefit Corporation, since it’s a relative new entity type, is that not all states recognize it. When it comes time to foreign qualify your Delaware Benefit Corporation in your home state, this can sometimes complicate the process.
For example, the state of California does not currently recognize Delaware Benefit Corporations, and therefore, cannot distinguish between a Benefit Corporation and a General Stock Corporation.
Thus the corporate endings that are acceptable in Delaware (Public Benefit Corporation, PBC and P.B.C.) are not applicable when registering as a foreign corporation in California.
As of today, the state of California only allows the following corporate indicators for Corporations:
So if you are planning to operate as a foreign entity in the state of California with your new Delaware Benefit Corporation, this is just one more thing to consider when determining the name of the company.
While it isn’t entirely clear yet which, if any, other states may limit the use of Benefit Corporation corporate indicators, we will certainly let you know as soon as we hear about it.
Lastly, it is important to note that Benefit Corporations can obtain a certification, making it a Certified B Corporation, by meeting certain requirements set forth by a non-profit organization known as B Lab.
If you have any questions about forming your Delaware Benefit Corporation, Non-Profit Corporation, General Corporation, LLC or LP, we’re here for you. Please give us a call today at 1-800-345-6277, Ext. 6133 or feel free to call me directly at 1-302-644-6265.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.
There is 1 comment left for What to Know When Naming a Benefit CorporationPatrick Walsh said: Wednesday, March 15, 2017
California has recognized us and has granted tax exempt status. Don't know if this helps.HBS Staff replied: Monday, March 20, 2017
Yes, we are thrilled about that. However, the naming guidelines for California are different than the rest of the country, so we are merely explaining that.