A public benefit corporation (PBC) is a type of legal entity that offers public benefits in Washington State. It combines the legal structure of a traditional business corporation with a focus on achieving a positive impact on society and the environment. Public benefit corporations, also known as “social purpose” corporations, have become a popular business choice in recent years, as more entrepreneurs seek to combine their business objectives with their social and environmental values.
What Is a Public Benefit Corporation?
A public benefit corporation is a type of for-profit business structure that is focused on providing public benefits rather than solely maximizing profits. These benefits can include creating a positive impact on society, the environment, or both. Public benefit corporations are held to a higher standard of accountability and transparency than traditional corporations, and they must make decisions that result in a public benefit.
Public benefit corporations are like traditional corporations in many respects. They can enter into contracts, hire employees, and own assets. However, there are also some key differences between the two types of business structures. Public benefit corporations must pursue a general public purpose, such as protecting the environment, providing affordable housing, or promoting economic development. They must also consider the effects of their decisions on all stakeholders, including shareholders, employees, customers, and the public.
Advantages of Public Benefit Corporations
Public benefit corporations offer a number of advantages to entrepreneurs, investors, and other stakeholders. One of the key benefits is the ability to pursue public goals while still generating profits. This structure allows entrepreneurs to pursue their social and environmental objectives while still operating a profitable business.
Public benefit corporations also provide entrepreneurs with a legal framework to protect their social and environmental objectives. The PBC’s purpose is explicitly defined in its governing documents, which makes it difficult for shareholders to challenge the goals of the business. This provides entrepreneurs with a certain level of protection against potential legal challenges.
Finally, public benefit corporations can be attractive to investors who are looking for businesses that are committed to social and environmental goals. These businesses are often more attractive to potential investors, as they have a clear purpose and mission that can be attractive to those looking to invest in sustainable and socially responsible businesses.
Forming a Public Benefit Corporation in Washington State
Forming a public benefit corporation in Washington State requires completing a few steps. First, a business must file an Articles of Incorporation with the Washington Secretary of State. This document must include language that clearly states the business’s purpose and its commitment to providing a public benefit.
The business must also draft corporate governance documents, such as bylaws, which provide further guidance on the business’s purpose and operations. These documents must include provisions that ensure the public benefit is given priority over the interests of shareholders.
Once the business has completed these steps, it must submit its governing documents to the Secretary of State. Once approved, the business can begin operating as a public benefit corporation.
Conclusion
Public benefit corporations are an increasingly popular business structure for entrepreneurs who want to combine their business objectives with their social and environmental values. These businesses offer a number of advantages to entrepreneurs, including the ability to pursue public goals while still generating profits, a certain level of legal protection, and increased attractiveness to potential investors. To become a public benefit corporation in Washington State, entrepreneurs must file Articles of Incorporation and other corporate governance documents with the Secretary of State.
