What is the Difference Between a Regular Corporation and a Benefit Corporation?
Recently we discussed the establishment of the Pennsylvania Benefit Corporation as a new legal business entity in Pennsylvania. To recap, a Benefit Corporation is a corporation committed to operating in a way that has a positive impact on both the environment and society. In today’s article we will discuss a few of the main differences between a Benefit Corporation and a traditional corporation.
The law that established the Benefit Corporation as a legal business entity states that the fiduciary duties of the directors and officers include duties not imposed on the directors and officers of a traditional corporation. The enhanced fiduciary duties and commensurate protection of a Benefit Corporation’s directors and officers include the following:
- The duty to create public benefit and consider nonfinancial interests, even in the event of a sale;
- Enhanced legal protection for directors and officers to allow them to consider the best interests of the work force, community, and environment when making decisions for the corporation; (This contrasts with the duties of directors in traditional corporations where the bottom line is the first priority.)
- Expanded shareholder rights to enforce the added fiduciary duty and standard of consideration;
- Super-majority (2/3) vote of the shareholders required to remove or lessen higher standards of directors and officers;
- Provides corporate opportunity to name and enforce pursuit of one or more public benefit purposes’
- Provides greater access to capital that current alternative approaches.
If you are interested in establishing a benefit corporation or modifying your existing corporation to the Benefit Corporation guidelines, the Scolieri Law Group, P.C. is here to help.
Located in western Pennsylvania, the experienced attorneys at Scolieri Law Group, P.C. can answer these and other business law questions, including helping you choose the right legal business entity to meet your goals. Contact us today at (412)765-0546 or info@scolierilaw.com.