The Benefit Corporation: An Economic Analysis with Recommendations to Boards, Courts, and Legislatures

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By Dirk Sampselle and Kyle Westaway

In July, 2013, an article authored by B Revolution Founder Dirk Sampselle and Affiliate Attorney Kyle Westaway was published in Emory Law Journal, a leading journal for legal scholarship.  The article analyzes the benefit corporation legislation and provides recommendations to state legislatures, board of directors, and courts of law, with regard to how to interpret and utilize the legal form to serve investors, ventures, and ultimately the public.

“The benefit corporation legislation can be seen as a system of new formal rules, which at once seeks to complement and increase the effectiveness of the “corporate social responsibility” and “sustainable business” trends, and also disrupt the longstanding, informal constraint of shareholder wealth maximization. This legislation is designed to reduce transaction costs for both consumers and investors who subscribe to the “ethical consumer” and “impact investing” trends, respectively. This Article offers an analysis that describes key challenges of the legislation and prescribes some best-guess answers for how to address such challenges.”

Reposted courtesy of the the Emory Law Journal.