L³Cs: The Next Big Wave in Socially Responsible Investing or Just Simply Too Good to Be True?

Abstract:     
This article pertains to the growing popularity of Low-Profit, Limited Liability Companies (L3Cs). It includes a discussion of the potential pitfalls involved in the adoption of this organizational structure. Part I introduces a timely example that illustrates how L3Cs are gaining steam across the U.S. Part II provides a history of the L3C movement and offers a look at the current legal landscape of L3Cs on the federal and state level. Part III offers a glimpse into possible problems that L3Cs may run into including registration as well as disclosure requirements with the Securities and Exchange Commission ("S.E.C."). In addition, Part III examines what the fiduciary obligations will be in L3Cs and concludes by exploring the possibility of overlapping governmental policing that may occur as more of these entities sprout up.

Number of Pages in PDF File: 16

Keywords: Securities, L3Cs, Social Entrepreneurship

JEL Classification: K22, M13

Accepted Paper Series