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Georgia Guide to Benefit Corporations
Wanting to know more about Florida Benefit Corporations…
…because you want to lock in your profitable purpose as you grow?
…because you want to brand and capture public goodwill as a benefit company?
…because you want to attract top-notch talent as you scale?
…because you want to grow a relevant, scalable, and sustainable enterprise?
Then this Guide to Georgia Benefit Corporations is for you!
Fundamentals of Georgia Benefit Corporations
B Corps aren’t Benefit Corporations (necessarily) – Certified B Corps are companies that have been vetted by the U.S. nonprofit B Lab to be good corporate citizens with triple bottom line business models. They get to brand themselves with the B Corp certification mark, similar to the way buildings can certify as LEED and chocolatiers as Fair Trade. As part of the B Corp certification process, B Lab requires companies that are legally structured as corporations to convert to Public Benefit Corporations. However, LLC’s and even sole proprietors can become Certified B Corps. If you are a sole proprietor or LLC, you don’t necessarily have to convert to a Benefit Corporation to become a B Corp. Also, you can realize the many advantages of a Georgia Benefit Corporation legal structure even if you never intend to certify with B Lab as a B Corp business. Read more about how B Corps and Benefit Corporations are related here.
Dawgs Rule the Day – Georgia Benefit Corporations are governed by Georgia law – not Delaware, not Federal, not Tribal – this is a southern thing, darlin! When registering and operating as a Georgia Benefit Corporation, you need to make sure you are following the Georgia statute and ongoing legal standards when it comes to transparency, shareholder rights, and other key operational aspects. If you are not following the rules, e.g. how and when to publish your required impact reports, then you can lose the protections of the Benefit Corporation framework, and potentially be subject to shareholder disputes. Fortunately, the Christopher & Panasci ESG team at Rockridge can help you understand best operational practices and what the Georgia Benefit Corporation means for your investors, executives, and customers.
Peaches and Peach to the IRS – Your Georgia Benefit Corporation is treated like a typical corporation for tax purposes. There are no magic tax breaks here, but your accountant can guide you on what impact expenses may be deductible to a Benefit Corporation that otherwise aren’t connected to the purpose of a standard corporation.
You Look Great in that Dress – Georgia Benefit Corporations must be transparent in highlighting what they are doing to further their general and specific public benefits. You gotta walk the walk to maintain legal protection for your impact purpose and purpose and prioritized stakeholders.
You Look Great in those Shorts – Georgia Benefit Corporations must clearly state the stakeholders they are benefitting beyond their general corporate purpose to make profit. The public has to know what you’re all about and what you’re working with.
Georgia Benefit Corporation Statutory Sections that Matter
Georgia Code §14-2-1801 – §14-2-1807
A few of the statutory sections of the Georgia Benefit Corporation that you’ll want to pay particular attention to include:
Notice. A Georgia Benefit Corporation must state in its articles of incorporation its status as a benefit corporation. In Georgia, public benefit means a positive effect, or reduction of negative effects, on society, on the environment, or on one or more communities or categories of persons, entities, or interests, other than shareholders in their capacity as shareholders, including effects of an artistic, charitable, cultural, economic, ecological, educational, environmental, literacy, medical, religious, scientific, social, or technological nature.
Conversion. A Georgia corporation cannot convert to a Benefit Corporation without two-thirds approval of its shareholders. Additionally, all shareholders may vote irrespective of voting or class limitations in the corporation’s charter or bylaws. Similarly, termination of Benefit Corporation status by vote or acquisition requires two-thirds shareholder approval.
Operations. Directors of a Georgia Benefit Corporation must consider the public benefit or benefits specified in the corporation’s articles of incorporation when managing or directing the business and its affairs.
Transparency. A Georgia Benefit Corporation adopt a standard or standards by which to measure its performance in pursuing the public benefit or benefits specified in its articles of incorporation. An annual report must be provided annually to shareholders and to persons requesting copies in writing.
Compliance. A Georgia Benefit Corporation will not be financially liable for violating any of the statutory requirements.
Rockridge Practical Observations on Georgia Benefit Corporations
Anything goes? Georgia’s statute is written more broadly than the Model Benefit Corporation Legislation (MBCL) that’s been adopted in other states. Instead of requiring the commitment to a general positive impact on society and the environment, and encouraging the promotion of specific benefits like positively impacting underserved individuals, the Georgia statute merely requires the weighing of a reduction of negative effects on any number of special interests like education or religion. As we’ve observed in Grading Georgia’s Public Benefit Corporation Law, this might mean that a company satisfies its public benefit by promoting fish fry fundraisers at its local parochial school.
Who’s got Trae? The MBCL includes a comprehensive definition of the third-party standard that a Benefit Corporation should use in evaluation its annual efforts in furtherance of its general and specific public benefits. This definition accounts for credibility, robustness, and transparency. Contrastingly, the Georgia statute merely requires a Benefit Corporation to “adopt a standard or standards” to use in evaluating its own performance in furtherance of its stated benefits. we’re not really clear whether such a loose requirement is sufficient to adequately cover the activities of a Georgia Benefit Corporation in a way that is meant to lock in a company’s mission and guard against shareholder primacy.
Have a seat and stay awhile. The Georgia statute took several years to work its way through the state legislature, and still passed the Senate with a vote of only 32-19. In other words, we’re not likely to see amendments to the Act anytime soon.
Georgia Benefit Corporation Resources:
An Entrepreneur’s Guide to Going “B” by Center for Business and Environment at Yale
An Investor’s Guide to B Corps by Center for Business and Environment at Yale
Better Business by Chris Marquis
Benefit Corporation Law and Governance by Fredrick Alexander
B Local Georgia by amazing B Corp advocates in and around Georgia
How are B Corps and Public Benefit Corporations Related by Rockridge Venture Law
Rockridge® Guide to Southeastern Benefit Corporation Statutes by Rockridge Venture Law
The Delaware Public Benefit LLC: Use it to Become a “Benefit Company” in Your State by Rockridge Venture Law
About Kevin Christopher
Kevin Christopher is the founder of Rockridge Venture Law®, and co-founder of ResoluteTherapeutics, a CARB-X funded antibiotic innovator, and Calliope Bio, a Yale launched synthetic biology startup and recent participant in the Nucleate Activator and Berkeley Skydeck accelerators. Kevin is a 2050 Fellow at the Center for Business and Environment (CBEY) under Vincent Stanley, a global leader in sustainability and Director of Philosophy at Patagonia. Kevin has led Rockridge® to become a B Corp Best For The World and Real Leaders Top 150 global impact company has been recognized as a SuperLawyer and Conscious Company Magazine’s Top Business Leader.
Kevin’s corporate and IP practice focuses on the crossover of innovation + impact in venture ecosystems. He is a registered patent attorney and published poet, uniquely combining creativity and technological acumen in registration of intellectual property, business transactions, and litigation. Kevin’s practice areas including: patent and trademark prosecution, licensing and litigation; corporate law, with an emphasis on benefit corporations, socially responsible businesses and high-growth emergent companies; government contracts, with an emphasis on innovation funding; corporate and investor financing; and, technology commercialization.
As an entrepreneur, Kevin has founded companies in biotech, renewables, and consumer product industries, all active and growing. Kevin is a leader within the B Corp community, having founded Tennessee’s local B Corp network B Tennessee and serving as pro bono counsel to B Academics. Kevin mentors entrepreneurs as program advisor with Bethesda Green Hub, First Flight Venture Center, Nashville Entrepreneur Center, University of California Venture Catalyst, and Yale Tsai CITY. With a background in public-private partnerships, Kevin is also a National Institutes of Health (NIH) RadX faculty member, and National Science Foundation (NSF) Center for Bioplastics and Biocomposites program evaluator.
To discuss Georgia Benefit Corporations with Kevin Christopher, schedule an appointment through Calendly or email him directly at email@example.com.