Florida legislators recently approved a bill permitting businesses to operate as benefit corporations. (Benefit corporations are sometimes referred to as "B Corps.") Twenty-five other states and the District of Columbia precede Florida's recognition of benefit corporations. However, in contrast to almost all its predecessors, Florida's law (which you can find here) creates two types of benefit corporations: the "benefit corporation" and the "social purpose corporation."
The benefit corporation portion of Florida's law is nearly identical to the Model Act (which you can find here). However, there are some minor differences. For example, the law permits a benefit corporation's articles of incorporation or bylaws to relieve the benefit director of the duty to provide a compliance report. The law also requires no minimum ownership for shareholders to bring enforcement proceedings, and it omits provisions relating to business judgment.
Like the benefit corporation portion of the law, the social purpose portion generally adheres to the Model Act. The principal difference between Florida's newly created social purpose corporations and benefit corporations is their respective standards of conduct for directors. Rather than setting forth a detailed list of things that directors "must" consider in carrying out their duties, directors of Florida's social purpose corporations must consider only (1) the shareholders and (2) the company's ability to accomplish its public benefit. (Directors "may" then consider a number of other things, such as employees, the local and global environment, the community, and societal factors.) This short list of mandatory considerations offers a stark contrast to the lengthy list that directors of Florida benefit corporations must consider.
Florida is not the first state to create a "social purpose corporation." That is the same moniker that Washington State uses. Florida also does not stand alone in its creation of two types of benefit corporations. California created the "benefit corporation" and the "flexible purpose corporation." California's law regarding the "benefit corporation" is similar to the Model Act. To become a flexible purpose corporation in California, a company must specify at least one "special purpose" within its articles of incorporation—these include the promotion of positive short-term or long-term effects on the environment, society, the community, or company employees. Likewise, Minnesota created the "general benefit corporation" and the "specific benefit corporation." A "general benefit corporation" is a benefit corporation that elects to pursue a general public benefit, which is defined as a "net material positive impact from the business and operations of a general benefit corporation on society, the environment, and the well-being of present and future generations." A "specific benefit corporation" is a benefit corporation with a specifically articulated public benefit.
As the twenty-sixth state to get on board the benefit corporation train, Florida made sure to follow California's and Minnesota's blueprint by creating two types of "B Corps." Our firm, Smith Moore Leatherwood, has formed a "Benefit Corporation Team" that is eager to assist aspiring and existing benefit corporations in exploring this new terrain.
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