Loewenstein on Benefit Corporations

Mark Loewenstein (Colorado) offered thoughtful comments today on Colorado’s adoption of a benefit corporation statute as part of The 29th Annual Corporate Law Center Symposium at The University of Cincinnati College of Law.  He has memorialized some of his view on benefit corporations in an article that he recently posted on SSRN, which is entitled, Benefit Corporations: A Challenge in Corporate Governance.  The article originally appeared in a 2013 issue of the The Business Lawyer and is well worth a read.  The abstract states the following:

Benefit corporations are a new form of business entity that is rapidly being adopted around the country. Though the legislation varies from jurisdiction to jurisdiction, most statutes are based on a model proposed and promoted by B Lab, itself a nonprofit corporation. The essence of these statutes is that, in making business judgments, the directors of a benefit corporation must consider the impact of their decisions on the environment and society. The model legislation, though, may create serious governance issues for the directors of benefit corporations that operate under these laws. This article analyzes the model legislation and identifies its weaknesses, particularly with respect to governance issues.

— Eric C. Chaffee