Delaware Public Benefit Corporations: Widening the Fiduciary Aperture to Broaden the Corporate Mission

Posted: 12 Jul 2016

See all articles by Frederick H. Alexander

Frederick H. Alexander

Morris, Nichols, Arsht & Tunnell, Attorneys At Law - Corporation Law Counseling Group

Date Written: Spring 2016

Abstract

As a past practitioner of corporate law in Delaware for 26 years who remains convinced that the for‐profit corporation remains the best vehicle for raising and allocating private capital, the author nevertheless also believes that the stockholder primacy model that currently animates corporate fiduciary principles is too narrow. In the excerpts from his new book that make up this article, the author describes the “benefit corporation,” which introduces a corporate governance model based on stakeholder principles. This model encompasses a more complete recognition of the complex interdependencies between all aspects of a global society, and of the responsibility of corporations to reflect those interdependencies in their decision‐making. Although initially a skeptic, the author now believes that benefit corporation law offers an important opportunity for companies to align the interests of their investors with those of their stakeholders in a potentially value‐increasing way that is discouraged by traditional corporate law. State legislatures began authorizing benefit corporations in 2010, and they are now available in 32 U.S. jurisdictions. Over 3,000 benefit corporations have been formed. What's more, they are raising capital from traditional funders, including venture capitalists, and at least one benefit corporation has already gone public. As the author says in closing, “the stakeholder governance model facilitated by benefit corporations provides a clear path to a future of shared value creation, and some investors and corporations have started down that path.”

Suggested Citation

Alexander, Frederick H., Delaware Public Benefit Corporations: Widening the Fiduciary Aperture to Broaden the Corporate Mission (Spring 2016). Journal of Applied Corporate Finance, Vol. 28, Issue 2, pp. 66-74, 2016, Available at SSRN: https://ssrn.com/abstract=2808227 or http://dx.doi.org/10.1111/jacf.12177

Frederick H. Alexander (Contact Author)

Morris, Nichols, Arsht & Tunnell, Attorneys At Law - Corporation Law Counseling Group ( email )

1201 N. Market Street
P.O. Box 1947
Wilmington, DE 19899
United States
302-575-7228 (Phone)
302-425-4666 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
1,078
PlumX Metrics