The public benefit corporation (PBC) is a statutory corporate form that allows a corporation to align its corporate purpose with a particular public benefit. The creation and promotion of PBCs over the past decade has dovetailed with important public conversations regarding the purpose of the corporation, environmental, social, and governance (ESG) issues, and related third-party certifications and regulations. Although there are meaningful differences among those conversations, the PBC overlaps with each channel and can serve an important strategic function for companies and investors thinking through how those issues should be handled.
This GT Update attempts to outline key elements of a PBC, largely from the Delaware corporate law perspective, while identifying its overlap with those important conversations and related perspectives. The article first addresses the placement of public benefits relative to corporate purpose, moves to a summary of technical and drafting issues involved in the PBC corporate documents, including those required by the Delaware General Corporation Law (DGCL), then touches on the modifications of fiduciary duties in a PBC according to the public benefit and affected communities, and finishes with the ancillary disclosure framework and considerations for community engagement.
Although the understanding and use of PBCs are still in nascent stages, the PBC can feature prominently in strategic approaches to ESG and corporate purpose.