Do you know the difference between the B Corp and Benefit Corporation? It is said to be one of the common questions that most of the B Corp law firm owners face while helping social enterprises evaluating their standards.
If you have any confusion, this blog will help in providing the best knowledge; help you to distinguish between the Southeast B Corps and Benefit Corporations along with providing enough information about both of them.
Introduction to B Corps and Benefit Corporations by Southeast
The Corporation is the structure, as stated under the state law. The Corporation is governed by the laws of that particular place where it belongs and where it is operating. For instance, from Alabama to California, the countries are diverse and there are diverse set of rules too. Above all diversities is the universal law of shareholders. This means that corporate directors are chosen by corporate shareholders. The directors who are hired to manage the Corporation should provide financial returns to the shareholders.
One drawback of the shareholder policy is that it restricts corporate management’s ability to esteem its staff and keep the environmental footprints or measure the social consequences of its practices. Though it is oversimplified, it is not an egregious factor. For several years, corporations are prevented from paying the employees higher wages at the expense of issuing the dividends by the lawsuits that are provided by the shareholders against those corporate directors or the shareholders.
This is why the benefit corporation comes into view as the direct response to shareholder primacy. Data shows that the benefit corporation tends to attract more talent and scale better than other non-profit associates. There are even tax benefits that are not available in the case of standard corporations and limited liability companies.
Benefit Corporation And Why It Is So Much Important?
The Public Benefit Corporation is said to be the legal framework for promoting corporate social responsibility. This means that the shareholders can pressure any company for maximizing the monetary returns to the investors against various considerations like social impact.
The company can be prevented from rolling out the novel paternity leave program for all its staff members when the company has to risk the shareholder dividends. By operating Benefit Corporations, the companies can protect their activities in terms of management from the shareholders. Benefit Corporations consider people, the planet, and the profit as important parts of success.