Unpacking the Rise of Benefit Corporations: A Transatlantic Comparative Case Study

46 Pages Posted: 12 Feb 2019 Last revised: 28 Mar 2019

See all articles by Scott Shackelford

Scott Shackelford

Indiana University - Kelley School of Business - Department of Business Law; Harvard Kennedy School Belfer Center for Science & International Affairs; Center for Applied Cybersecurity Research; Stanford Center for Internet and Society; Stanford Law School

Janine S. Hiller

Virginia Polytechnic Institute & State University

Xiao Ma

King & Wood Mallesons

Date Written: January 31, 2019

Abstract

The increasing interest being in social entrepreneurship has brought with it the beginnings of a legal revolution in the way that firms are incorporated and managed with thirty-three states having enacted statues permitting the formation of special corporate entities known as benefit corporations. These businesses are required to pursue a public benefit or community purpose while still earning a profit for their shareholders. Yet not all benefit corporation statutes are created equal. Varying top-down and bottom-up approaches were taken to enact these laws, which may contribute to different success rates in terms of the number of benefit corporations created in the preceding years. In order to identify governance best practices that could inform other states and nations debating similar legislation, this article analyzes the different ways that the benefit corporation statutes were created in Virginia, Connecticut, and Delaware. This process of adoption and resulting incorporation of entities is then compared to the European Union’s efforts at regulating social entrepreneurship, with a particular focus on the UK’s Community Interest Company Approach. Through this lens, the Article investigates the processes and supporters of benefit corporation statutes, and compares theses with EU efforts to support social enterprises, in order to better understand how experimentation with legally unique forms of business contribute to current efforts to modify the relationship between business and society.

Keywords: benefit corporations, BCorp, sustainability, human rights, CSR

Suggested Citation

Shackelford, Scott J. and Hiller, Janine S. and Ma, Xiao, Unpacking the Rise of Benefit Corporations: A Transatlantic Comparative Case Study (January 31, 2019). Virginia Journal of International Law, 2019; Kelley School of Business Research Paper No. 19-15. Available at SSRN: https://ssrn.com/abstract=3326852 or http://dx.doi.org/10.2139/ssrn.3326852

Scott J. Shackelford (Contact Author)

Indiana University - Kelley School of Business - Department of Business Law ( email )

Bloomington, IN 47405
United States

Harvard Kennedy School Belfer Center for Science & International Affairs ( email )

79 JFK Street
Cambridge, MA 02138
United States

Center for Applied Cybersecurity Research ( email )

Wylie Hall 105
100 South Woodlawn
Bloomington, IN 47405
United States

Stanford Center for Internet and Society ( email )

Palo Alto, CA
United States

Stanford Law School ( email )

Stanford, CA 94305
United States

Janine S. Hiller

Virginia Polytechnic Institute & State University ( email )

Blacksburg, VA 24061
United States

Xiao Ma

King & Wood Mallesons ( email )

20th Floor, East Tower, World Financial Center
1 Dongsanhuan Zhonglu
Beijing, Chaoyang District 100020
China

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