B Corporation Legal Transition
Transitioning from your Existing Entity to a Compliant Entity
The B Corporation certification legal requirement varies by jurisdiction, providing entrepreneurs with a different set of choices based on the nexus of operations and jurisdiction for incorporation. Each option will have different implications for purpose structure, tax treatment, and governance mechanics.
B Revolution assists clients with selecting the appropriate legal entity, creating the appropriate purpose structure, and negotiating key terms with investors and among shareholders. Where appropriate we also assist with complex structures, such as non-profit/for-profit joint ventures, exempt entity formations for charities and foundations, and parent-subsidiary and licensing relationships.
Entity Transition costs vary by jurisdiction and other considerations, but typically range between $2500-4500 for a privately-held company and includes many of our Governance Development Services, which are critical to understanding compliance and obligations within the B Corporation legal structures. The transition package typically includes some or all of the following, in addition to our governance services:
- Choice of Jurisdiction Analysis
- Choice of Entity Analysis
- Authoring of B Corporation-Compliant Entity Transition Instrument
- Public Benefit Purpose Definition Exercises
- Authoring of Purpose Provisions and Creation of Purpose Structure
- Authoring of Required and Optional Amendments to Bylaws
- Counsel on Board Meeting Process
- Compliance Training
- Selection of Indemnification Provisions
- Shareholder Agreement Amendments
- Subscription Agreement Amendments
- Required Amendments to Share Certificates
Unrivaled Expertise in the Benefit Corporation Legal Entity
In 2010, B Lab pioneered a new type of legal entity, the benefit corporation, in the State of Maryland. The central thesis for what has become one of the fastest-spreading legislative movements in the history of corporate governance and entity structure has been that, for the past several decades, entrepreneurs and investors have been constrained by the “profit maximization norm,” which requires ventures to focus narrowly on profit creation rather than value creation. The benefit corporation legal entity frees entrepreneurs to make values-based decisions, benefiting stakeholders alongside shareholders in what has been dubbed the “shared value” approach to competitive strategy.
In 2010, B Revolution Founder Dirk Sampselle drafted the Benefit Corporation legislative memorandum for B Lab, the certifying agency for the B Corporation certification. That memorandum has been used to advocate for the entity’s adoption, and over 19 states have adopted the entity since its publication.
In 2013, Dirk authored what has become a leading peer-reviewed scholarly article on the Benefit Corporation legal entity, The Benefit Corporation: An Economic Analysis with Recommendations to Boards, Courts, and Legislatures, published in the prestigious Emory Law Journal, Volume 62 (July 2013).
Our expertise extends to other B Corporation compliant entities, including:
- B Corporation compliant LLCs
- B Corporation compliant “modified traditional corporations” (MTCs)
- B Corporation compliant “unmodified traditional corporations” (UTCs) governed by contractual arrangement with B Lab
Protect your Mission through Legal Structure and Governance
B Revolution’s expertise in corporate governance, B Corporation legal compliance, and entity purpose structures provides clients with a unique and unrivaled perspective on creating the ideal legal structure to suit the business’s purposes. By balancing stakeholder considerations with the profit interest and public benefit goals, understanding third-party performance and reporting requirements, and creating a manageable and structured board decision-making process, B Revolution helps clients institutionalize their mission in their legal structure to ensure the integrity of mission and values throughout the life of the business.
B Corporation Legal Compliance: Is Transition Sufficient?
As one of the requirements necessary for becoming B Corporation certified, applicant ventures must adopt a B Corporation compliant legal structure. However, many businesses fail to understand their obligations under the new, certification-compliant legal entities.
Read our article on B Corporation governance concerns to understand your obligations under a B Corporation compliant legal entity and how B Revolution can help you mitigate risk and maximize opportunity related to the certification.
B Revolution takes into consideration all the relevant factors before proposing options for legal structuring, and ensures clients understand the advantages and disadvantages, risks and rewards of each option. Each factor must be considered closely in the context of each unique enterprise and business model so that our clients can achieve a lasting legal structure that preserves the mission and achieves the desired impacts and profitability.