Businesses seek state’s new ‘benefit corporation’ status
A dozen companies committed to maximizing social good while turning a profit have filed papers with the state to become California’s first “benefit corporations.” … While that may sound like marketing hype, it’s important from a legal standpoint because it helps shield benefit corporations from lawsuits brought by shareholders who say that company do-gooding has diluted the value of their stock. California becomes the seventh state to adopt this relatively new corporate structure. Until now, California corporate law mandated that shareholders’ interests trump those of all other parties. Entrepreneurs who wanted to incorporate green initiatives or social causes into their businesses were often forced to become nonprofits, limiting their ability to raise venture capital.