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Corporate Purpose and Litigation Risk in Publicly Held U.S. Benefit Corporations

73 Pages Posted: 5 Apr 2017 Last revised: 21 Jun 2017

Joan MacLeod Heminway

University of Tennessee College of Law

Date Written: July 1, 2017

Abstract

Benefit corporations have enjoyed legislative and, to a lesser extent, popular success over the past few years. This article anticipates what recently (at the eve of its publication) became a reality: the advent of a publicly held U.S. benefit corporation — a corporation with public equity holders that is organized under a specialized U.S. state statute requiring corporations to serve both shareholder wealth aims and social or environmental objectives. Specifically, the article undertakes to identify and comment on the structure and function of U.S. benefit corporations and the unique litigation risks to which a publicly held U.S. benefit corporation may be subject. In doing so, the article links the importance of a publicly held benefit corporation's public benefit purpose to litigation risk management from several perspectives. In sum, the distinctive features of the benefit corporation form, taken together with key attendant litigation risks for publicly held U.S. benefit corporations (in each case, as identified in this article), confirm and underscore the key role that corporate purpose plays in benefit corporation law.

Keywords: Benefit Corporation, Social Enterprise, Litigation Risk, Corporate Purpose, Public Company, Publicly Held, Publicly Traded

JEL Classification: K22, K42

Suggested Citation

Heminway, Joan MacLeod, Corporate Purpose and Litigation Risk in Publicly Held U.S. Benefit Corporations (July 1, 2017). Seattle University Law Review, Vol. 40, No. 2, 2017; University of Tennessee Legal Studies Research Paper No. 319. Available at SSRN: https://ssrn.com/abstract=2945461

Joan MacLeod Heminway (Contact Author)

University of Tennessee College of Law ( email )

1505 West Cumberland Avenue
Knoxville, TN 37996
United States
865-974-3813 (Phone)
865-974-0681 (Fax)

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