Unpacking the Rise of Benefit Corporations: A Transatlantic Comparative Case Study

Abstract

The increasing interest being in social entrepreneurship has brought with it the beginnings of a legal revolution in the way that firms are incorporated and managed with thirty-three states having enacted statues permitting the formation of special corporate entities known as benefit corporations. These businesses are required to pursue a public benefit or community purpose while still earning a profit for their shareholders. Yet not all benefit corporation statutes are created equal. Varying top-down and bottom-up approaches were taken to enact these laws, which may contribute to different success rates in terms of the number of benefit corporations created in the preceding years. In order to identify governance best practices that could inform other states and nations debating similar legislation, this article analyzes the different ways that the benefit corporation statutes were created in Virginia, Connecticut, and Delaware. This process of adoption and resulting incorporation of entities is then compared to the European Union’s efforts at regulating social entrepreneurship, with a particular focus on the UK’s Community Interest Company Approach. Through this lens, the Article investigates the processes and supporters of benefit corporation statutes, and compares theses with EU efforts to support social enterprises, in order to better understand how experimentation with legally unique forms of business contribute to current efforts to modify the relationship between business and society.