Starting Jan. 1, 2015, Minnesota will have a new business entity that is already available in over 20 other states: the public benefit corporation.
A public benefit corporation is intended to be a socially- conscious organization that commits to making business decisions not just for the financial benefit of its owners, but also to pursue or create a public benefit. The act, while well-intended, lacks meaningful enforcement provisions and may invite abuse.
The legislature (with extensive drafting assistance from the bar) desired to provide a mechanism for socially-minded entrepreneurs to run their businesses for a public benefit, but to protect them from shareholder criticism for not putting profits first. The statute, in effect, gives such entrepreneurs a way to brand their businesses as socially-minded. The price of that branding opportunity is that the board must consider (and presumably, must be able to prove it considered) the public benefit. The other price of the brand is the annual report, which must be filed with the secretary of state’s office describing the public benefit corporation’s pursuit of the public benefit.