Why Public Benefit Corporations?

40 Pages Posted: 6 Oct 2016

See all articles by Michael B. Dorff

Michael B. Dorff

UCLA School of Law - UCLA School of Law; Southwestern Law School

Date Written: October 5, 2016


Public Benefit Corporations (“PBCs”) are a revolutionary new form of business organization that overturn the fundamental corporate principle of shareholder wealth maximization. Of the many questions that surround this new entity type, perhaps the most perplexing is why Delaware – the most influential and important state for corporate law by far – chose to adopt it. I explore this troubling question through qualitative empirical research. I find that Delaware primarily wanted to serve the needs of social entrepreneurs and financiers, but also hoped to harness the power of capitalism to remedy social ills that government has so far failed to fix. The PBC statute rather poorly implements either of these goals. The PBC statute is not a very good enforcement tool. On the other hand, the statute may prove an effective reinforcement tool, aiding sincere social entrepreneurs to pursue their various missions. Also, private ordering, such as certification by outside entities like B Lab, may fill many of the important gaps left by the law.

Keywords: Social Enterprise, Social Entrepreneurship, Benefit Corporation, Public Benefit Corporation, Corporate Governance, Entrepreneur, Entrepreneurship

JEL Classification: k22

Suggested Citation

Dorff, Michael B., Why Public Benefit Corporations? (October 5, 2016). Delaware Journal of Corporate Law (DJCL), Vol. 42, Forthcoming, Southwestern Law School Research Paper No. 2016-10, Available at SSRN: https://ssrn.com/abstract=2848617

Michael B. Dorff (Contact Author)

UCLA School of Law - UCLA School of Law ( email )

Southwestern Law School ( email )

3050 Wilshire Blvd.
Los Angeles, CA 90010
United States

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