Form a Public Benefit Corporation Now
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:
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;
- 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.
Is a Public Benefit Corporation a Nonprofit?
No. Public Benefit Corporations and Non-Profit Corporations are two different types of business entities. Each is a distinct legal structure with a unique purpose. A Public Benefit Corporation is a for-profit corporation that is organized to pursue both financial profit and a specific public benefit. On the other hand, a non-profit organization is structured exclusively to purposes other than making a profit.
Are Public Benefit Corporations Tax Exempt?
No. Delaware Public Benefit Corporations are not tax exempt. Since PBCs are for-profit, they are typically still subject to the same tax laws and regulations as other for-profit corporations. For a tax exempt entity, you will need to form a non-profit company.
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
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". You can form a Delaware PBC online with Harvard Business Services, Inc. or contact our team if you have any questions.