Elimination of Statutory Barriers May Lead to New Wave of Public Benefit Corporations
February 24, 2021
Publication| Corporate Transactions| Corporate Governance| Mergers & Acquisitions| Special Committees & Investigations| Corporate & Chancery Litigation
On August 1, 2013, a new subchapter of the General Corporation Law of the State of Delaware (the “DGCL”) was added to enable Delaware for-profit corporations to be incorporated as or to become a Delaware public benefit corporation, or “PBC.” Rather than being operated solely to maximize value for stockholders, like traditional corporations, PBCs are required to be managed in a manner that balances the interests of three constituencies: the stockholders’ pecuniary interests, the best interests of those materially affected by the corporation’s conduct, and a specific public benefit identified in the certificate of incorporation. 8 Del. C. §§361-368. After a few years of experience with PBCs, and with interest in sustainability and corporate environmental and social responsibility on the rise, many of the statutory barriers relating to PBCs have been reduced or eliminated, making it easier for existing Delaware corporations to become PBCs.