Business owners operating in Texas now have another entity to consider: B Corps. Effective September 1, 2017, Texas statutes allow for formation of a Public Benefit Corporation, or “B Corp”.
The purpose of a B Corp. is to allow a for-profit corporation to be operated for the “Public Benefit”.
Under the statute, “Public Benefit” means: “a positive effect, or a reduction of a negative effect, on one or more categories of persons, entities, communities, or interests, other than shareholders in their capacities as shareholders of the corporation, including effects of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific, or technological nature.”
The Board of Directors of a B Corp., are required to manage the business affairs of the company, not only to maximize profits for shareholders, but also for the Public Benefit set forth in the Articles. In this way, it can be helpful to those interested in investing in, or doing business Texas companies, for whom a particular Public Benefit may be important.
A B Corp. is also an option that those considering forming a traditional non-profit may want to consider as an alternative, since the B Corp. has fewer restrictions on activities than a non-profit.
A B Corp. can be formed by filing Articles of Formation with the Texas Secretary of State in compliance wit the statutory guidelines. Existing corporations can amend their Articles to become a B Corp.
Many other states have adopted similar legislation. For more information on the B Corp. movement check out this link: B Corporation Movement.
To find out whether a Texas B Corp. is right for your particular purpose, please seek advice from a licensed attorney.
Leigh K. Freeman is a business law attorney, entrepreneur, wife and mom in The Woodlands, Texas and is responsible for the content of this blog post. This blog post is for information purposes only and shouldn’t be seen as legal or tax advice. Readers should consult with a licensed attorney before taking any action. Copyright 2019, Leigh K. Freeman attorney at law.
