A Delaware Public Benefit Corporation (PBC) is a type of corporation that is formed in accordance with Delaware law and is designed to operate in a socially responsible and sustainable manner. Delaware was one of the first states in the United States to enact legislation allowing for the creation of PBCs.
Here are some key features and characteristics of Delaware Public Benefit Corporations:
- Purpose: The primary distinction of a PBC is its purpose. Unlike traditional corporations, which are typically focused on maximizing shareholder value, PBCs are required to have a broader public benefit purpose. This purpose is intended to create a positive impact on society and the environment.
- General Public Benefit: Delaware PBCs are required to identify a public benefit that they aim to produce. This could include promoting environmental sustainability, improving human health, or advancing social justice. The public benefit is a guiding principle for the company’s operations.
- Specific Public Benefit: In addition to the public benefit, a PBC can also specify one or more specific public benefits. These are concrete, measurable goals that the company commits to achieving. These goals are outlined in the PBC’s charter and serve as a basis for assessing the company’s performance.
- Reporting Requirements: PBCs in Delaware are required to provide regular reports to their shareholders, detailing their progress in achieving the general and specific public benefits outlined in their charter. This transparency is intended to hold the company accountable for its social and environmental commitments.
- Balancing Interests: While a PBC is committed to creating a positive impact, it is not required to prioritize public benefit over the financial interests of its shareholders. The directors of a PBC are obligated to balance the interests of the shareholders with the company’s public benefit mission.
- Legal Protection: Directors and officers of Delaware PBCs are generally protected from liability for decisions made in pursuit of the company’s public benefit purpose. This legal protection encourages directors to make decisions that align with the corporation’s social and environmental goals.
- Conversion: A traditional corporation can choose to convert into a PBC by amending its certificate of incorporation to include the necessary provisions. This conversion is subject to the approval of the shareholders.
It is important to note that while Delaware was an early adopter of PBC legislation, other states in the U.S. and countries around the world have also introduced similar legal frameworks to accommodate the growing interest in socially responsible and sustainable business practices.
