With the recent adoption of the Pennsylvania Benefit Corporation Act (effective January 22, 2013), Pennsylvania has joined 11 other states that have authorized the creation of a new type of corporation known as a “benefit corporation.”
Benefit corporations have many of the usual characteristics of a traditional business corporation, but are subject to new requirements with respect to purpose, accountability, and transparency. Benefit corporation must have a purpose to create “general public benefit” in addition to any other lawful purpose. The Act defines a general public benefit as a material, positive impact on society and the environment, taken as a whole, as assessed against a third-party standard.
A benefit corporation may also have a “specific public benefit” purpose. Examples of such benefits include: 1) providing low-income or underserved individuals or communities with beneficial products or services; 2) preserving the environment; 3) improving human health; 4) promoting the arts, sciences or advancement of knowledge. The Act also establishes requirements for transparency in the fulfillment of these purposes. A Pennsylvania benefit corporation must publish an annual benefit report to inform both its shareholders and the public about its success in meeting its public benefit purposes. The benefit corporation must select a comprehensive, credible, independent, and transparent third-party standard against which it can assess and measure its performance.