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Maintaining Mission: Meeting the Legal Requirement for B Corp Certification.pptx

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Still working on the legal requirement for B Corp Certification? Join B Lab's resident mission alignment experts Rick Alexander and Holly Ensign-Barstow and Standards Analyst Matt Nabhan to learn about the legal component of B Corp Certification. This webinar will cover the reasons behind this component of B Corp Certification, how and when to meet the legal requirement depending on your form of incorporation, and tools for moving through the process. Then we'll dive into benefit corporations with the team that has been instrumental in passing benefit corporation legislation in over 30 states.

This presentation was given by Rick Alexander, Holly Ensign-Barstow, Matt Nabhan, and Jessica Friesen on March 1st, 2016.

Publié dans : Business
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Maintaining Mission: Meeting the Legal Requirement for B Corp Certification.pptx

  1. 1. Jessica Friesen Community Development Featuring B Lab Staff: Hosted by: Holly Ensign-Barstow Mngr, Mission Alignment Team Rick Alexander Head of Legal Counsel Matt Nabhan Standards Analyst
  2. 2. Poll: How familiar you are with the legal requirement for B Corp certification? ● Very familiar ● Somewhat familiar ● Not familiar at all
  3. 3. B Lab’s Mission
  4. 4. B Lab is Changing Systems We believe the path to systemic change is to: • Shine light on leaders • Create paths for others to follow
  5. 5. Shine a light on leaders Building a global community of Certified B Corporations who meet the highest standards of verified, overall social and environmental performance, public transparency, and legal accountability. 1600+ CERTIFIED B CORPS 130+ INDUSTRIES 1 UNIFYING VISION 47+ COUNTRIES
  6. 6. Earn a verified score of 80 points on the B Impact Assessment Adopt legal protection and permission to consider all stakeholders through legal Mission Alignment. Make a profile showing topline performance on Bcorporation.net. Certified B Corps
  7. 7. Adopt legal protection and permission to consider all stakeholders through legal Mission Alignment. Legal Framework
  8. 8. Goals for Today Learn about why there is a legal requirement for Certification Understand how and when to meet the legal requirement for your state and corporate entity Recognize that B Lab is here to help you with this process!
  9. 9. Earn a verified score of 80 points on the B Impact Assessment Adopt legal protection and permission to consider all stakeholders through legal Mission Alignment. Why is there a Legal Requirement?
  10. 10. Traditional corporations must be managed only to produce value for stockholders. Corporate commitment to other interests in order to create sustainable long term value for shareholders is precluded. Under Traditional Corporate Law
  11. 11. “Directors cannot . . . defend a business strategy that openly eschews stockholder wealth maximization.” - eBay v. Newmark (Craigslist) (2010) “The object of the corporation is to produce profits for the stockholders and . . . the social beliefs of the managers, no more than their own financial interests, cannot be their end in managing the corporation.” - Chief Justice of the DE Supreme Court Leo Strine, Wake Forest L. Rev. (2012) Duties Profit maximization is the ultimate obligation of corporate directors:
  12. 12. “[C]oncern for non-stockholder interests is inappropriate when an auction among active bidders is in progress, and the object no longer is to protect or maintain the corporate enterprise but to sell it to the highest bidder.” - Revlon v. MacAndrews & Forbes Holding (1986) “Under Revlon in the traditional public company context, a board of directors that has decided to sell the corporation in a change of control transaction must, within the discretion afforded it by positive regulatory law, sell the corporation to the bidder offering to pay the highest price to the company’s stockholders.” - Chief Justice of the DE Supreme Court Leo Strine, (2014) 13 Exit
  13. 13. • • • Benefits of the Legal Requirement
  14. 14. LLC/LLP/LP Legal Requirement Amend governing documents with B Lab language
  15. 15. Corporation Legal Requirement
  16. 16. Corporations Have Two Options 1. Constituency Statute Amendment: Amend articles of traditional corporation with B Lab language 2. Benefit Corporation Amendment: Amend articles to elect benefit corporation status
  17. 17. Become a Benefit Corporation or Constituency State Amendment: CT, DC, FL, HI, ID, IL, IN, LA, MA, MD, MN, NJ, NY, NV, OR, PA, RI, or VT Become a Benefit Corporation: AR, AZ, CA, CO, DE, MT, NE, NH, SC, UT, VA, or WV Constituency State Amendment: GA, IA, KY, ME, MS, MO, ND, NM, OH, SD, TN, WI, or WY Wait until an option is available: AL, AK, KS, MI, NC, OK, or TX Availability of Two Options Depends on State
  18. 18. COOPs/Sole Proprietors/ Professional Corps….
  19. 19. The Rest of the World B Lab works with local experts to identify legal pathways for mission-aligned companies to consider impact over time.
  20. 20. Deadlines Deadline to meet legal requirement depends on the state of incorporation and entity type: • LLCs/LLPs/LPS: 90 days from Certification • Constituency statute amendment: 1 year from Certification • Benefit Corporations: Varies from 2 to 4 years from Certification
  21. 21. Benefit Corporation
  22. 22. Traditional corporations must be managed only to produce value for stockholders. Corporate commitment to other interests in order to create sustainable long term value for shareholders is precluded. Benefit corporations are designed to create long term value through broad commitment to sustainable growth. They are ideally suited to impact business models and companies that integrate sustainable practices into their operations. Basics of a Benefit Corp
  23. 23. • Expanded purpose beyond maximizing share value to explicitly include general and specific public benefit • Directors are accountable to considering stakeholder interests when making decisions • Transparent with respect to the expanded purposes Benefit Corp Details
  24. 24. • Protection • Flexibility • Attraction and Retention of Employees • Marketing • Succession Planning Benefits of Benefit Corp
  25. 25. 33 New Statutes Since 2010
  26. 26. Rapid Growth of Benefit Corporations 2 7 3,000 1,500 0 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘to date
  27. 27. Leading Benefit Corporations
  28. 28. Benefit Corps Can Raise Capital
  29. 29. IPO: Laureate Education 30
  30. 30. Poll: Are you exploring becoming a benefit corporation? ● Yes ● No ● Not applicable or eligible
  31. 31. Educating the Market “Ecosystem”
  32. 32. Resources & help How to meet the legal requirement: on www. bcorporation.net, including all roadmaps and legal requirements by entity and states Benefit corporation information: www.benefitcorp.net, including how to become a benefit corp, FAQs for investors, boards and attorneys, and guides to decision making. B Lab is here to help!
  33. 33. Learn to Love the Legal!
  34. 34. Redefine success in business. Help create the new economy. Build a better business. Compete to be not only the best in the world, but the best for the world.
  35. 35. How to become a benefit corp ● Prepare article amendment by adding required language “This corporation is a benefit corporation” and choosing a specific benefit purpose that reflects the mission of your company if required by your state. ● Obtain Board approval ● Obtain shareholder approval (2/3) ● File amendment with the Secretary of State ● Notify stockholders of appraisal rights rights if required by our state
  36. 36. ▪ B Impact Assessment: http://bimpactassessment.net/ ▪ How to Certify as a B Corp: http://www.bcorporation.net/become-a-b-corp/how-to- become-a-b-corp ▪ Legal Requirements: http://www.bcorporation.net/become-a-b-corp/why-become-a- b-corp/protect-your-mission ▪ FAQ for Investors & Directors: http://www.bcorporation. net/sites/all/themes/adaptivetheme/bcorp/pdfs/faqs_investors_and_directors4.pdf ▪ Pending B Corp Status for Start Ups: http://www.bcorporation.net/become-a-b- corp/how-to-become-a-b-corp/steps-start-ups ▪ Case Studies: http://bimpactassessment.net/case-studies ▪ B Corp Press: http://www.bcorporation.net/news-media Jessica Friesen B Lab: Community Team jessica@bcorporation.net
  37. 37. Legal Framework Resources ▪ Legal Requirements: http://www.bcorporation.net/become-a-b-corp/why-become-a- b-corp/protect-your-mission ▪ FAQ for Investors & Directors: http://www.bcorporation. net/sites/all/themes/adaptivetheme/bcorp/pdfs/faqs_investors_and_directors4.pdf ▪ General Legal Roadmap: http://www.bcorporation.net/become-a-b-corp/how-to- become-a-b-corp/legal-roadmap ▪ LLC Legal Language: http://www.bcorporation.net/become-a-b-corp/how-to-become- a-b-corp/legal-roadmap/llc-legal-roadmap ▪ Corporation Legal Roadmap: http://www.bcorporation.net/become-a-b-corp/how-to- become-a-b-corp/legal-roadmap/corporation-legal-roadmap
  38. 38. Legal Framework Resources ▪ Benefit corporation basics: : http://benefitcorp.net/ ▪ How to become a benefit corp: http://benefitcorp.net/businesses/how-become- benefit-corporation ▪ Benefit reporting: http://benefitcorp.net/businesses/benefit-corporation-reporting- requirements ▪ FAQ for investors: http://benefitcorp.net/sites/default/files/FAQs%20Investors% 206_9.pdf ▪ FAQ for directors: http://benefitcorp.net/sites/default/files/FAQs%20Directors% 20and%20Officers_6_17.pdf ▪ Guide to board room decision making: http://benefitcorp.net/sites/default/files/Board% 20Procedures%20for%20Public%20Benefit%20Corporations.pdf ▪ How to choose a specific public benefit: http://benefitcorp. net/sites/default/files/Delaware%20Public%20Benefit%20Corporations_% 20Choosing%20A%20Specific%20Benefit%20FINAL_6_3.pdf ▪ Case studies of benefit corps raising capital: http://benefitcorp.net/benefit-corporations- raising-capital
  39. 39. Becoming a benefit corporation: AltSchool AltSchool operates a growing network of K-8 micro- schools and improves access to quality schooling for all children •2013: Incorporated in Delaware as a C Corp •2013: Raised $33 M Series A funding •2014: Received unanimous support to become a public benefit corporation from its investors, including Founders Fund and Andreessen Horowitz •2015: Raised $100 M from Andreessen Horowitz, Founders Fund, Learn Capital and First Round Capital AltSchool’s benefit corporation legal status allows the team to think beyond short-term profits and focus on fundamentally improving the education system for many decades to come” – Founders Fund
  40. 40. Becoming a benefit corporation: Farmigo • During financing, intent to become a benefit corporation was clear • Investors determined that director liability wouldn’t change • Benefit corporations status did not pose an upfront obstacle in investor discussions Farmigo, founded in 2009, is an online farmer’s market • Raised $10M from Benchmark, Sherbrooke Capital, Toby Coppel and Hadi Partovi
  41. 41. Raising capital as a benefit corporation: Cotopaxi Cotopaxi is a vertically-integrated outdoor gear and apparel brand, with a social mission at its core •2013: Incorporated as a PBC and started fundraising •No pushback from investors on corporate form •Raised $3 M in seed funding NEA, Lerer Hippeau Ventures, and Forerunner Ventures •2015: Raised 6.5M in Series A led by Greycroft Partners with NEA, Lerer Hippeau Ventures, Forerunner Ventures and Brand Foundry
  42. 42. Raising capital as a benefit corporation: Yerdle •2012: Incorporated as a benefit corporation •Raised capital from angel investors and $1.7M in seed funding via capped convertible note Yerdle , founded in 2012, by former executives at Walmart and Satchi & Satchi, is an app for exchanging used goods •Raised $5M from VC funds in series A financing round from The Westly Group, Claremont Creek, Prelude, Mindful Investors and DBL Investors •Benefit corporations status did not pose an upfront obstacle in early investor discussions
  43. 43. The Fortune 500 are supporting benefit corporations Founded in 2006, Plum Organics is the No. 1 brand of organic baby food in US • June 2013: Acquired by Campbell Soup Company • Plum approached Campbell about converting to benefit corporation status in time for DE effective day 2 months later • Campbell approved the transition so that Plum could continue to balance profitability mission, an important brand attribute consumers expect and value. “There’s a lot more authenticity in the process today and there’s a lot more strategy around long-term shareholder value. If you get in line with that, it’s not a scary proposition. Frankly, I kind of like being the only [publicly-held owner of a DE Public Benefit Corporation] — it’s a great story for us to tell. But it’s a model that a lot of others could follow.” - Dave Stangis, VP Corporate Affairs and Social Responsibility, Campbell Soup Co
  44. 44. “Schoolzilla's transition to a Public Benefit Corporation and their stated social purpose make it clear to school districts that Schoolzilla is committed to their students' success now and in the future. That is especially important for schools. Furthermore, Schoolzilla's PBC status has enabled them to hire amazing, mission-driven talent.” – Reach: New Schools Capital Schoolzilla, founded in 2013, is a data organization and insight platform for K12 schools • Before 2015, raised $3M from impact investors plus Foundry Group and Angel List • Customers particularly supportive of benefit corp transition • Raised $2M after transition from Serious Change, Reach: New Schools Capital, Hallett Capital, Impact America Fund & others Becoming a benefit corp: Schoolzilla

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