Legislative Document 1519, effective September 19, 2019, provides for the creation of benefit corporations. With this law, Maine joins the more than 35 states authorizing the formation and operation of either a benefit corporation or the similar—although not exactly the same—public benefit corporation.
Maine’s law is based on the model benefit corporation law developed by B Lab. As the comment to the model law explains, a benefit corporation is “a form of business corporation that offers entrepreneurs and investors the option to build, and invest in, a business that operates with a corporate purpose broader than maximizing shareholder value and that consciously undertakes a responsibility to maximize the benefits of its operations for all stakeholders, not just shareholders.” Highlights of the Maine statute are below.
A benefit corporation is incorporated in the same manner as any other for-profit corporation. (It files Articles of Incorporation with the Secretary of State).
However, its Articles of Incorporation must state that it is a benefit corporation.
Election by existing corporation
An existing corporation can become a benefit corporation by amending its Articles of Incorporation to state that it is a benefit corporation. The amendment must be adopted by at least two-thirds of the votes of each class or series entitled to cast a vote.
A benefit corporation must have a purpose of creating general public benefit. A general public benefit is a material positive impact on society or the environment, taken as a whole, assessed against a third party standard from the business and operations of a benefit corporation.
The Articles of Incorporation can also identify one or more specific benefits such as the following:
- providing low income or underserved individuals or communities with beneficial services
- providing economic opportunities beyond the creation of jobs in the normal course of business
- improving human health
- protecting or restoring the environment
- advancing the arts, sciences, or advancement of knowledge
- increasing the flow of capital to entities that endeavor to benefit society or the environment
Standard of conduct for directors
In discharging their duties and considering the best interests of the benefit corporation, the board of directors, committees, and individual directors are required to consider the effects of any action or inaction upon the following:
- the shareholders
- the employees and workforce of the benefit corporation, its subsidiaries, and suppliers
- the interests of customers as beneficiaries of general or specific public benefits
- community and societal factors
- the local and global environment
- the short and long-term interests of the benefit corporation, including benefits that may accrue to the benefit corporation from its long-term plans and the possibility that these interests may be best served by the continued independence of the benefit corporation
- the ability of the benefit corporation to accomplish its general public benefit purpose and any specific public benefit purposes
Annual benefit report
A benefit corporation is required to prepare an annual benefit report. The annual benefit report must be sent to all shareholders and posted on the public portion of the benefit corporation’s website, or if none, provided to anyone who requests a copy.
The report must include a narrative description of how the benefit corporation pursued general public benefit, and any specific public benefit set forth in its articles of incorporation, the extent to which those public benefits were created, circumstances hindering that creation, and the process and rationale for selecting or changing the third-party standard. It also must contain an assessment of the overall social and environmental performance of the benefit corporation against a third-party standard. Other information is required as well.
For more information on Maine, benefit corporations see LD 1519 or 13-C Maine Revised Statutes c. 18, Sec. 1801 to Sec. 1832, where the law is codified. For assistance in filing or obtaining documents on behalf of a Maine benefit corporation or providing the clerk (agent for service of process) contact CT at 855.969.7762.