Benefit Corporations: Role of Directors and Their Liability in Italy and in the United States of America

Abstract

The benefit corporation has given rise to a wide debate regarding both the systematic impact of this corporate form and, more specifically, the possible protection that is to be granted to stakeholders. This article intends to clarify the extent to which control by courts over directors can be reconciled with the well-known business judgment rule, and whether lawsuit can be maintained by third parties. Thus, evaluation by a judge must be more extensive, given that the fiduciary duties and the procedure that leads to making the relevant decisions are more complex. After examining the role of courts, the article discusses whether and on what terms third parties may act against the directors of a benefit corporation if they feel that their interests have been harmed. It is suggested that, in specific cases, it is possible to grant protection to third parties who have relied legitimately on what is indicated in the articles of incorporation or by-laws of a benefit corporation. Even if the legal claims of third parties can be accepted, they are limited in light of the broad formulations adopted in the articles of incorporation or by-laws and in light of the significant burden of proof on the plaintiffs, so as to avoid the risks that recourse to judicial remedies could create.