To “B” or not to “B”: Duties of Directors and Rights of Stakeholders in Benefit Corporations
An emerging legal form for business entities is the Benefit Corporation, a variation on the traditional for-profit corporation that grants the board of directors broader discretion to consider nonshareholder constituents in corporate management decisions. Although this corporate form adequately responds to consumers’ weariness of “big business” and attracts shareholders who value social responsibility more than short-term gains, it raises questions regarding benefit enforcement. Who may bring claims against a benefit corporation for failing to consider—or perhaps considering too often—the interests of external stakeholders? This Note analyzes the purpose and motivations behind benefit corporation legislation, evaluates recent proposals for the enforcement of fiduciary duties, and advocates for a solution as hybrid as the new corporate form itself. This Note argues that shareholders, as well as some external stakeholders, should be afforded more enforcement rights than the Model Legislation envisions.
J.D./M.S. Finance candidate, 2017, Vanderbilt University Law School; B.A. University of Maryland, College Park.