Public benefit corporations, which are recognized in over 30 states, have now been adopted in Texas. The Texas public benefit corporation laws became effective on September 1, 2017. Now, businesses can incorporate in the State of Texas as a public benefit corporation.
Public benefit corporations create legal protection for companies to consider and balance a positive social purpose with the financial interests of shareholders. The public benefit can include effects of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific or technological nature. This corporate structure creates significant advantages for attracting and retaining (1) employees who find the company’s purpose a primary reason they choose to work there, (2) consumers who identify with and purchase from more trustworthy social-conscious companies, and (3) impact investors that are able to hold companies more accountable to their missions.
Founders and investors must be aligned on the corporation’s social values, revenue and profitability objectives, and exit strategies. Because public benefit corporations must delicately balance multiple interests, this alignment will be critical to the growth and success of the business, even more so than a traditional for-profit corporation.
Under the Texas Business Organizations Code, public benefit corporations are treated as ordinary for-profit corporations except as discussed below.
Upcoming Events
