Becoming a Certified B Corp
- Any type of for-profit entity can apply to B Lab to become a certified B Corp.
- To become a B Corp, one must (a) complete the “B Impact Assessment Survey” and score at least 80/200, (b) sign a Term Sheet and Declaration of Independence, and (c) if required, amend its governing documents to include the “B Corp Legal Framework” which requires that the company consider the impact of its decisions not only on shareholders but also its employees, customers, suppliers, community and the environment.
- B Corp certification is for a two-year term and subject to an annual certification fee ranging from $500 – $25,000 annually (based on the B Corp’s annual sales).
- B Corp certification is similar to a license and may be terminated.
- A benefit corporation is legal entity and specific type of corporation that may only be formed in a state (including California) that has enacted legislation authorizing its creation.
- Every benefit corporation is required by law to have a general or specific (optional) public benefit purpose.
- An existing corporation can become a benefit corporation by amending its Articles of Incorporation and Bylaws.
- A change to or from a benefit corporation is a corporate entity change that requires 2/3 shareholder approval. Any shareholders who vote against a conversion from a corporation to a benefit corporation can force the corporation to purchase their shares at fair market value.
Benefit Enforcement Proceedings
Reporting & Audits
Choosing a Path
Each company has to consider how best to achieve its goals. Is it considering becoming certified as a B Corp or becoming a benefit corporation because it is the right thing to do? For positive publicity? Because customers are giving preferential treatment to B Corps and/or benefit corporations? Consider which public benefits the company pursues or wants to pursue; if they are already part of the company’s culture, and all owners agree, then the benefit corporation route makes sense and, if the company is already a corporation, relatively easy to achieve. Take a look at annual reports for the past few years--does the company already publicize the benefits it promotes? If so, then publishing annual reports conforming with the public benefit law should not impose a burden. If the company is not a corporation, check with its attorneys and accountants regarding the impact of conversion. If the company is considering B Lab certification, take a look at the B Impact Assessment Survey to get a sense if the company’s current practices qualify for B Corp certification, and check the license fee schedule to determine the bi-annual expense. If the company changes direction and abandons its public benefit purpose, it is easier to let the B Corp certification lapse than it is to convert from a benefit corporation to a standard corporation.