Golden Shares and Social Enterprise

56 Pages Posted: 24 Mar 2021 Last revised: 11 Aug 2022

See all articles by Naveen Thomas

Naveen Thomas

New York University School of Law; Brooklyn Law School

Date Written: September 17, 2021


Social enterprises—for-profit companies with public-interest missions—are now ubiquitous, yet few have emerged from the realm of small business. The main obstacle to their growth is a gap in trust between managers and investors, with each side lacking any legal assurance that the other will pursue both profits and purpose. Too often, these misgivings limit businesses’ access to capital.

Beyond new legal forms created to accommodate this sector, some social entrepreneurs have adopted inventive organizational structures as part of a growing global movement called steward ownership. Among the first structures in the United States is the golden share model, in which a Delaware public benefit corporation with dual-class stock grants all voting rights to managers, all economic rights to investors, and critical veto rights to an independent foundation.

This Article is the first to address this movement and its potential to advance social enterprise. The golden share model begins to close this sector’s trust gap from one side, by assuring managers that investors cannot divert a company from its mission. But from the other side, the gap may widen even further, as investors worry that managers will ignore that mission and abuse their unchecked authority.

To bridge this gap, novel applications of established industry practices and familiar legal concepts, like impact metrics and voting trusts, could vastly improve the model. With these practical proposals, social entrepreneurs could retain independence in pursuing their missions, while attracting the capital needed to achieve them at scale.

Keywords: social enterprise, steward ownership, golden shares, dual-class stock, nonvoting stock, corporations, impact investment, impact metrics, voting trusts

Suggested Citation

Thomas, Naveen, Golden Shares and Social Enterprise (September 17, 2021). 12 Harvard Business Law Review 201 (2022), Available at SSRN:

Naveen Thomas (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States

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