Florida Law Would Allow for Social Purpose and Benefit Corporations

SB 654, a bill that would create two new classifications of for-profit, socially responsible companies, is headed to the governor’s desk after being passed unanimously in the Florida Legislature. The Orlando Business Journal reports that the proposed law would allow for the creation of social purpose corporations and benefit corporations.

Previously, young people typically believed they could either work for a profit-driven company and make a good salary, or try to make a difference working for a nonprofit (perhaps while living with their parents). The hope is that the bill would lead to the creation of Millennial-founded companies that have a sustainable business model and can have a positive impact on their communities.

Also called a B Corp, a benefit corporation’s purpose is to create a general benefit to society or the environment. In 2013, Delaware became the eighteenth state to pass benefit corporation legislation; a move that solidified the longevity of these entities due to Delaware’s influence on corporate law. A social purpose corporation would create a narrower public benefit, such as products and services for low-income consumers, economic opportunities other than new jobs, environmental preservation, and cultural and educational initiatives.

Benefit corporations and social purpose corporations are required to meet minimum standards for social and environmental responsibility, as well as transparency and accountability. They are expected to value solutions to problems in society and the environment over shareholder interests. In other words, positive impact would influence business decisions more than profit.

In addition to the creation of new companies, existing organizations would be able to amend their bylaws so they can be classified as a benefit corporation or social purpose organization. This would allow these companies to operate on a stronger economic footing.

If signed into law by Governor Rick Scott, SB 654 is expected to make these corporations more economically viable while benefiting their employees and the communities they serve. Please contact us to learn more about what benefit corporations and social purpose corporations are, and the requirements that they must meet.