On October 24, 2012, Pennsylvania Governor Tom Corbett signed into law the Pennsylvania Benefit Corporation Act (the “Act”), making Pennsylvania one of 12 states that have authorized the creation of a new type of corporation known as a “benefit corporation.”
A growing sector of the economy, led by “social entrepreneurs,” is embracing a new understanding of a corporation’s responsibility to focus on more than just bottom-line earnings. These businesses are committed instead to pursuing a “triple bottom line” that includes people, planet and profits.
The Act provides an alternative choice of entity for Pennsylvania businesses that are seeking higher standards for their purpose, transparency and accountability. Unlike a standard Pennsylvania business corporation, benefit corporations are required to consider the effects of corporate actions on the interests of other stakeholders of the corporation (including, for example, employees, customers and suppliers). In turn, the businesses that elect benefit corporation status receive greater protection to pursue their sustainable business goals and to maintain their business purpose over time, as well as a way to differentiate their business and transparently report on their social and environmental performance.
In short, the Act provides the growing community of mission-driven businesses in Pennsylvania with a new form of corporation designed to support the pursuit of a “triple bottom line” business model.
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