How to Form a Delaware Public Benefit Corporation

A benefit corporation, or a B corporation, is a type of business entity that generates profit while focusing on creating a positive impact on society. If you want to start a business that generates profit while prioritizing social good, forming a Delaware Public Benefit Corporation is generally a good option.The process of forming a Delaware Public Benefit Corporation is very similar to that of forming a General Corporation:

• File a Certificate of Incorporation with the Delaware Secretary of State
• Retain a Delaware Registered Agent

Why Form a Public Benefit Corporation?There are several reasons why someone might choose to form a public benefit corporation instead of a traditional for-profit corporation.

• Attract Investors - Some people are more drawn to businesses that prioritize a social or environmental mission. The "PBC" title could bring in more sales or attact more investors to your business.
• Social Impact - Prioritizing a social or environmental mission alongside making a profit can be appealing to founders who are passionate about making a positive impact while building a successful company.
• Brand Reputation - Forming a PBC can enhance a company's reputation, as it will show that your team has a clear commitment to social responsibility. A PBCs social impact can also be used as a key branding strategy.
• Long-term Focus - PBCs are legally obligated to consider the impact of their decisions on their chosen societal or environmental causes. This protects the company's mission, ensuring long-term commitment to their goals.
• Tax status - A PBC can elect to be taxed as a C-Corp or S-Corp. Not to confused with nonprofits, PBCs are generally not a tax-exempt company.

If you’d like more details about why forming a Public Benefit Corporation is so favorable, you can read more on our website.

How to Form a Public Benefit Corporation

The differences between forming Delaware Public Benefit Corporation and a Delaware General Corporation can be found in how the Certificate of Incorporation is prepared. The certificate for a PBC must do the following:

• State that the corporation is a Public Benefit Corporation. In the official company name, if you choose to become a public benefit corporation, it must end with one of the two following terms: "public benefit corporation" or "PBC";
• Indicate one (or more) public benefit purpose(s) or goal(s) the company will specifically promote. These should be artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific and/or technological in nature;
• Indicate a general business purpose regarding the for-profit activities, although such a statement in modern practice is extremely broad. A Public Benefit Corporation is not a Non-Profit. Delaware PBCs will focus on their charitable cause as well as their internal financial objectives;
• Include specific provisions regarding director liability, among other things, specifically applicable to and permitted under the provisions of the Delaware General Corporation Law dealing with Public Benefit Corporations.
• All the other information typically required on a corporation’s Certificate of Incorporation is also needed, such as the name of the incorporator and the name and address of your Delaware Registered Agent.

How to Maintain Compliance in a Delaware PBC

In order to remain a Public Benefit Corporation, the company must be in compliance with the following:

• Hold an organizational meeting soon after you file the Certificate of Incorporation, in which you elect a Board of Directors and formally adopt the Public Benefit Corporation’s bylaws; alternatively, adopt a board resolution by unanimous board consent in lieu of an organizational meeting, making all of the decisions and selections the corporation would have adopted at an organizational meeting;
• Draft bylaws, just as one would for the operation and governance of any other corporation;
• The Board of Directors must furnish a Benefit Report every other year (at least) to the shareholders. In Delaware, a Public Benefit Corporation’s board of directors is not required to make its Benefit Report public, although it may do so; this Benefit Report must include:
  • The annual objective(s) of the Public Benefit Corporation as established by the Board of Directors;
  • How progress in achieving the goal(s) is measured;
  • Facts that indicate whether or not the goals were achieved;
  • Overall assessment of the Public Benefit Corporation’s success;
• Stock certificates evidencing ownership of shares in a Public Benefit Corporation should clearly state the corporation’s status as such.
• Each notice of a stockholder meeting should also bear a notice of the corporation’s Public Benefit Corporation status.
• Maintain a Delaware Registered Agent
• Pay your annual Delaware Franchise Tax
• File an Annual Report The annual report is due on March 1st of each year, and has a fee of $50.

Delaware B Corporations offer the unique opportunity to create a positive social or environmental impact while balancing financial growth. You can form a Delaware PBC online with Harvard Business Services, Inc. or contact our team if you have any questions.