The Ins And Outs Of Benefit Corporations

Law360, New York (February 17, 2015, 5:46 PM EST) -- A growing trend of sustainable and ethically minded profit-making has laid the foundation for a new legal entity: the benefit corporation. Well-known companies such as Campbell Soup and Patagonia are incorporating benefit corporations into their corporate structures, sometimes as subsidiaries. Twenty-seven states have passed legislation allowing for the formation of benefit corporations, including Delaware, California and New York.

The new legal structure offers protection from take-overs that threaten to change the mission of the company and may hinder certain shareholder derivative suits because directors and officers are explicitly permitted to consider interests other than shareholder wealth maximization. For a business committed...

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