Are you choosing between a “for-profit” (LLC or corporation) versus “non-profit” entity? There is an exciting third option.
Pennsylvania allows for the creation of special entity that is both organized for profit but has an express purpose of creating a general public benefit. This is a benefit corporation. It offers entrepreneurs and investors the option to develop, and invest in, businesses that advance socially and environmentally responsible objectives. A benefit corporation may also have a mission to create one or more specific public benefits. An existing corporation purely for profit may elect to become a benefit corporation by a two-thirds vote of its shareholders.
Our lawyers help through the process of both determining what entity is best for you, and all the details to form the entity you need. You only get once chance to file your paper work correctly, the first time. For example, to form a benefit corporation in Pennsylvania, the Articles of Incorporation, accompanied by a docketing statement, should be filed with the Bureau of Corporations and Charitable Organizations. The application must also contain information such as:
The above is not an exclusive list of things to do to form a benefit corporation. You should talk to a lawyer about how to form a benefit corporation, correctly. Once formed, there are things needed to keep the entity going, but don’t sweat it. Our lawyers do all the heavy lifting. For example, you need to file the minutes of the corporation. Plus, each year, you must file a report with the Department of State describing your public benefit. The report must contain such things as:
The general public benefit and any specific public benefit pursued and created during the year and any circumstances that may have hindered the creation of these benefits;
An assessment of overall social and environmental performance of the benefit corporation against a third-party standard and state the process and basis for selecting the third-party standard;
The compensation paid to each director;
The name of each person that owns 5% or more of the outstanding shares of the benefit corporation; and
Contain the annual compliance statement of the benefit director described in Section 3322(c)
Contain a statement of any relationship between the organization that established the third-party standard and the benefit corporation, or their directors, officers or any holder of 5% or more of the governance interests/outstanding shares in either organization, including any financial or governance relationship which might materially affect the credibility of the use of the third-party standard
Again, the above is not an exclusive list of all the things needed to keep a benefit corporation going. Contact our experienced Pittsburgh lawyers for a free consultation about how to create and maintain a benefit corporation.