What are Benefit Corporations and Flexible Purpose Corporations, and how are they identified?

The article United States: California’s New Entities: Benefit Corporations And Flexible Purpose Corporations discusses benefit corporations and flexible purpose corporations, two subtypes of traditional business corporations that can be organized under the California Corporations Code (as of 2012). These allow the directors of a corporation to pursue interests other than solely those economic interests of its shareholders; for instance, directors can make decisions to address social objectives (e.g., environmental health).

The author notes that to be recognized as one of these subtypes, a corporation must include a specific statement in its Articles of Incorporation, identifying that corporation as either a benefits corporation or a flexible purpose corporation.

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Written by Alina.