Still working on the legal requirement for B Corp Certification? Join B Lab's resident mission alignment experts Rick Alexander and Holly Ensign-Barstow and Standards Analyst Matt Nabhan to learn about the legal component of B Corp Certification. This webinar will cover the reasons behind this component of B Corp Certification, how and when to meet the legal requirement depending on your form of incorporation, and tools for moving through the process. Then we'll dive into benefit corporations with the team that has been instrumental in passing benefit corporation legislation in over 30 states. This presentation was given by Rick Alexander, Holly Ensign-Barstow, Matt Nabhan, and Jessica Friesen on March 1st, 2016.

1. Jessica Friesen
Community Development
Featuring B Lab Staff: Hosted by:
Holly Ensign-Barstow
Mngr, Mission Alignment Team
Rick Alexander
Head of Legal Counsel
Matt Nabhan
Standards Analyst

2. Poll:
How familiar you are with the legal
requirement for B Corp certification?
● Very familiar
● Somewhat familiar
● Not familiar at all

3. B Lab’s Mission

4. B Lab is Changing Systems
We believe the path to systemic change is to:
• Shine light on leaders
• Create paths for others to follow

5. Shine a light on leaders
Building a global community of
Certified B Corporations who meet
the highest standards of verified,
overall social and environmental
performance, public transparency,
and legal accountability.
1600+
CERTIFIED B
CORPS
130+
INDUSTRIES
1
UNIFYING VISION
47+
COUNTRIES

6. Earn a verified
score of 80 points
on the B Impact
Assessment
Adopt legal protection
and permission to
consider all stakeholders
through legal Mission
Alignment.
Make a profile
showing topline
performance on
Bcorporation.net.
Certified B Corps

7. Adopt legal protection
and permission to
consider all stakeholders
through legal Mission
Alignment.
Legal Framework

8. Goals for Today
Learn about why there is a legal requirement
for Certification
Understand how and when to meet the legal
requirement for your state and corporate
entity
Recognize that B Lab is here to help you with
this process!

9. Earn a verified
score of 80 points
on the B Impact
Assessment
Adopt legal protection
and permission to
consider all stakeholders
through legal Mission
Alignment.
Why is there a Legal Requirement?

10. Traditional corporations must be managed
only to produce value for stockholders.
Corporate commitment to other interests in
order to create sustainable long term value for
shareholders is precluded.
Under Traditional Corporate Law

11. “Directors cannot . . . defend a business strategy that openly
eschews stockholder wealth maximization.”
- eBay v. Newmark (Craigslist) (2010)
“The object of the corporation is to produce profits for the
stockholders and . . . the social beliefs of the managers, no
more than their own financial interests, cannot be their end in
managing the corporation.”
- Chief Justice of the DE Supreme Court Leo Strine,
Wake Forest L. Rev. (2012)
Duties
Profit maximization is the ultimate obligation of corporate
directors:

12. “[C]oncern for non-stockholder interests is inappropriate
when an auction among active bidders is in progress, and the
object no longer is to protect or maintain the corporate
enterprise but to sell it to the highest bidder.”
- Revlon v. MacAndrews & Forbes Holding (1986)
“Under Revlon in the traditional public company context, a
board of directors that has decided to sell the corporation in a
change of control transaction must, within the discretion
afforded it by positive regulatory law, sell the corporation to
the bidder offering to pay the highest price to the company’s
stockholders.”
- Chief Justice of the DE Supreme Court Leo Strine, (2014)
13
Exit

13. •
•
•
Benefits of the Legal Requirement

15. LLC/LLP/LP Legal Requirement
Amend governing documents with B Lab language

16. Corporation Legal Requirement

17. Corporations Have Two Options
1. Constituency Statute Amendment: Amend
articles of traditional corporation with B Lab
language
2. Benefit Corporation Amendment: Amend
articles to elect benefit corporation status

18. Become a Benefit Corporation or Constituency
State Amendment: CT, DC, FL, HI, ID, IL, IN, LA, MA,
MD, MN, NJ, NY, NV, OR, PA, RI, or VT
Become a Benefit Corporation: AR, AZ, CA, CO, DE,
MT, NE, NH, SC, UT, VA, or WV
Constituency State Amendment: GA, IA, KY, ME,
MS, MO, ND, NM, OH, SD, TN, WI, or WY
Wait until an option is available: AL, AK, KS, MI, NC,
OK, or TX
Availability of Two Options Depends on State

19. COOPs/Sole Proprietors/ Professional Corps….

20. The Rest of the World
B Lab works with local experts to identify legal pathways for
mission-aligned companies to consider impact over time.

21. Deadlines
Deadline to meet legal requirement depends on the
state of incorporation and entity type:
• LLCs/LLPs/LPS: 90 days from Certification
• Constituency statute amendment: 1 year from
Certification
• Benefit Corporations: Varies from 2 to 4 years from
Certification

22. Benefit
Corporation

23. Traditional corporations must be managed only to
produce value for stockholders. Corporate commitment
to other interests in order to create sustainable long term
value for shareholders is precluded.
Benefit corporations are designed to create long term
value through broad commitment to sustainable growth.
They are ideally suited to impact business models and
companies that integrate sustainable practices into their
operations.
Basics of a Benefit Corp

24. • Expanded purpose beyond maximizing share value
to explicitly include general and specific public
benefit
• Directors are accountable to considering
stakeholder interests when making decisions
• Transparent with respect to the expanded
purposes
Benefit Corp Details

25. • Protection
• Flexibility
• Attraction and Retention of Employees
• Marketing
• Succession Planning
Benefits of Benefit Corp

26. 33 New Statutes Since 2010

27. Rapid Growth of Benefit Corporations
2
7
3,000
1,500
0
‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘to date

28. Leading Benefit Corporations

29. Benefit Corps Can Raise Capital

30. IPO: Laureate Education
30

31. Poll:
Are you exploring becoming a benefit
corporation?
● Yes
● No
● Not applicable or eligible

32. Educating the Market “Ecosystem”

33. Resources & help
How to meet the legal requirement: on www.
bcorporation.net, including all roadmaps and legal
requirements by entity and states
Benefit corporation information: www.benefitcorp.net,
including how to become a benefit corp, FAQs for
investors, boards and attorneys, and guides to decision
making.
B Lab is here to help!

34. Learn to Love the Legal!

35. Redefine success in business.
Help create the new economy.
Build a better business.
Compete to be not only
the best in the world,
but the best for the world.

37. How to become a benefit corp
● Prepare article amendment by adding required language “This
corporation is a benefit corporation” and choosing a specific
benefit purpose that reflects the mission of your company if
required by your state.
● Obtain Board approval
● Obtain shareholder approval (2/3)
● File amendment with the Secretary of State
● Notify stockholders of appraisal rights rights if required by our
state

38. ▪ B Impact Assessment: http://bimpactassessment.net/
▪ How to Certify as a B Corp: http://www.bcorporation.net/become-a-b-corp/how-to-
become-a-b-corp
▪ Legal Requirements: http://www.bcorporation.net/become-a-b-corp/why-become-a-
b-corp/protect-your-mission
▪ FAQ for Investors & Directors: http://www.bcorporation.
net/sites/all/themes/adaptivetheme/bcorp/pdfs/faqs_investors_and_directors4.pdf
▪ Pending B Corp Status for Start Ups: http://www.bcorporation.net/become-a-b-
corp/how-to-become-a-b-corp/steps-start-ups
▪ Case Studies: http://bimpactassessment.net/case-studies
▪ B Corp Press: http://www.bcorporation.net/news-media
Jessica Friesen
B Lab: Community Team
jessica@bcorporation.net

39. Legal Framework Resources
▪ Legal Requirements: http://www.bcorporation.net/become-a-b-corp/why-become-a-
b-corp/protect-your-mission
▪ FAQ for Investors & Directors: http://www.bcorporation.
net/sites/all/themes/adaptivetheme/bcorp/pdfs/faqs_investors_and_directors4.pdf
▪ General Legal Roadmap: http://www.bcorporation.net/become-a-b-corp/how-to-
become-a-b-corp/legal-roadmap
▪ LLC Legal Language: http://www.bcorporation.net/become-a-b-corp/how-to-become-
a-b-corp/legal-roadmap/llc-legal-roadmap
▪ Corporation Legal Roadmap: http://www.bcorporation.net/become-a-b-corp/how-to-
become-a-b-corp/legal-roadmap/corporation-legal-roadmap

40. Legal Framework Resources
▪ Benefit corporation basics: : http://benefitcorp.net/
▪ How to become a benefit corp: http://benefitcorp.net/businesses/how-become-
benefit-corporation
▪ Benefit reporting: http://benefitcorp.net/businesses/benefit-corporation-reporting-
requirements
▪ FAQ for investors: http://benefitcorp.net/sites/default/files/FAQs%20Investors%
206_9.pdf
▪ FAQ for directors: http://benefitcorp.net/sites/default/files/FAQs%20Directors%
20and%20Officers_6_17.pdf
▪ Guide to board room decision making: http://benefitcorp.net/sites/default/files/Board%
20Procedures%20for%20Public%20Benefit%20Corporations.pdf
▪ How to choose a specific public benefit: http://benefitcorp.
net/sites/default/files/Delaware%20Public%20Benefit%20Corporations_%
20Choosing%20A%20Specific%20Benefit%20FINAL_6_3.pdf
▪ Case studies of benefit corps raising capital: http://benefitcorp.net/benefit-corporations-
raising-capital

42. Becoming a benefit corporation: AltSchool
AltSchool operates a growing network of K-8 micro-
schools and improves access to quality schooling for all
children
•2013: Incorporated in Delaware as a C Corp
•2013: Raised $33 M Series A funding
•2014: Received unanimous support to become a
public benefit corporation from its investors,
including Founders Fund and Andreessen Horowitz
•2015: Raised $100 M from Andreessen Horowitz,
Founders Fund, Learn Capital and First Round
Capital
AltSchool’s benefit corporation legal status allows the team to think beyond
short-term profits and focus on fundamentally improving the education
system for many decades to come” – Founders Fund

43. Becoming a benefit corporation: Farmigo
• During financing, intent to become a benefit corporation was
clear
• Investors determined that director liability wouldn’t change
• Benefit corporations status did not pose an upfront obstacle in
investor discussions
Farmigo, founded in 2009, is an
online farmer’s market
• Raised $10M from
Benchmark, Sherbrooke
Capital, Toby Coppel and
Hadi Partovi

44. Raising capital as a benefit corporation: Cotopaxi
Cotopaxi is a vertically-integrated outdoor gear
and apparel brand, with a social mission at its core
•2013: Incorporated as a PBC and started
fundraising
•No pushback from investors on corporate form
•Raised $3 M in seed funding NEA, Lerer Hippeau
Ventures, and Forerunner Ventures
•2015: Raised 6.5M in Series A led by Greycroft Partners with NEA,
Lerer Hippeau Ventures, Forerunner Ventures and Brand Foundry

45. Raising capital as a benefit corporation: Yerdle
•2012: Incorporated as a benefit
corporation
•Raised capital from angel investors and
$1.7M in seed funding via capped
convertible note
Yerdle , founded in 2012, by former
executives at Walmart and Satchi & Satchi, is
an app for exchanging used goods
•Raised $5M from VC funds in series A financing round from The
Westly Group, Claremont Creek, Prelude, Mindful Investors and
DBL Investors
•Benefit corporations status did not pose an upfront obstacle in early
investor discussions

46. The Fortune 500 are supporting benefit corporations
Founded in 2006, Plum Organics is the No. 1 brand of
organic baby food in US
• June 2013: Acquired by Campbell Soup Company
• Plum approached Campbell about converting to
benefit corporation status in time for DE effective day
2 months later
• Campbell approved the transition so that Plum could
continue to balance profitability mission, an important
brand attribute consumers expect and value.
“There’s a lot more authenticity in the process today and there’s a lot more strategy around
long-term shareholder value. If you get in line with that, it’s not a scary proposition. Frankly, I
kind of like being the only [publicly-held owner of a DE Public Benefit Corporation] — it’s a great
story for us to tell. But it’s a model that a lot of others could follow.” - Dave Stangis, VP
Corporate Affairs and Social Responsibility, Campbell Soup Co

47. “Schoolzilla's transition to a Public Benefit Corporation and their stated social purpose make it clear to
school districts that Schoolzilla is committed to their students' success now and in the future. That is
especially important for schools. Furthermore, Schoolzilla's PBC status has enabled them to hire
amazing, mission-driven talent.” – Reach: New Schools Capital
Schoolzilla, founded in 2013, is a
data organization and insight
platform for K12 schools
• Before 2015, raised $3M from impact investors plus
Foundry Group and Angel List
• Customers particularly supportive of benefit corp transition
• Raised $2M after transition from Serious Change, Reach: New
Schools Capital, Hallett Capital, Impact America Fund & others
Becoming a benefit corp: Schoolzilla