NEW YORK ( MainStreet) -- Beginning Friday, businesses in New York State will be able to structure themselves as so-called benefit corporations, or B Corps, a corporate legal structure that will likely appeal to businesses that are for-profit but have also made it part of their mission to contribute to environmental and sustainability efforts.
New York became the seventh state to recognize the legal structure when it passed the law in December. The hope is that by allowing a crop of socially minded entrepreneurs to structure their companies as B Corps, it will encourage more start-ups to come to New York. The move is also potentially significant given the breadth of investment capital -- and those looking for socially responsible investments -- that calls the Big Apple home.
The best example so far of a large company structured as a B Corp is outdoor apparel company Patagonia, which incorporated under California's laws.
"Benefit corporations will create a new industry of corporations with a 'double bottom line' of profit and socially responsible practices -- unlocking billions in potential investments in companies that pursue a positive material impact on society and the environment," according to New York Assembly Speaker Sheldon Silver in a Dec. 13 release.The first state with B Corp legislation was Maryland, in April 2010. Vermont, Virginia, Hawaii, California and New Jersey have also signed on. Washington, D.C., and three more states -- North Carolina, Pennsylvania and Michigan -- have pending B Corp legislation, according to Benefitcorp.net , a public service Web site run by the nonprofit B Labs, which offers a third-party "certification" for benefit corporations. Structuring your company as a B Corp isn't much more difficult than creating any other legal structure, such as an S Corp or C Corp, but there are a few differences. The states that have enacted such laws (or that have legislation pending to do so) have not included any tax advantages, B Labs says.