For most companies, fulfilling the legal requirement is a wise but simple process. If your company has a complex legal structure with affiliates, you will work with a member of B Lab Global`s certification and verification team and your contact from your regional partner B Lab or Sistema B to analyze your business structure and confirm which legal entities must meet the legal certification requirements. B Companies integrate stakeholder consideration into their legal structures to create long-term value for shareholders and stakeholders. Companies must comply with the relevant legal requirements within the deadlines specified in the agreement as a prerequisite for certification. The legal requirements of the company and the timing of the process are determined by the structure of the company and the responsibility of the incorporation. Please read the legal requirement tool to see the legal path applicable to your company and Appendix D of the agreement for more information on the legal requirement (including the company`s obligations if B Lab does not yet have a legal framework in its jurisdiction) and the deadlines for accepting the legal requirement. If you have any questions about whether your business unit or legal form is eligible for B Corp certification, or how to meet B Corp`s legal requirements in general, please contact B Lab (Hong Kong and Macau) for legal advice. While some versions of Benefit Corporation have been adopted in 30 states and the District of Columbia, the Delaware Public Benefit Corporation (PBC) is quickly becoming the benchmark due to its integration with the Delaware Corporate Code. For more information on delaware integration, check out our article Where should you incorporate? For more information on founding or transforming into delaware Public Benefit Corporation, check out our articles Delaware PBC: Is It Right for You? and you`re a Delaware PBC – now what? Why is this important? Due to cultural and legal norms, traditional legal entities are supposed to use profit maximization as the primary lens in decision-making. Many now see this as a barrier to creating long-term value for all stakeholders, including the shareholders themselves. B Corp`s legal framework rejects this short-sighted model.
B-Corps are required to take all stakeholders into account in their decisions. This gives them the flexibility to create long-term long-term value for all stakeholders, and even through exit deals such as IPOs and acquisitions, which can be achieved either by adopting the legal form of Benefit Corporation where such a legal form is available (e.g. in 36 states and the District of Columbia in the United States), either by amending a company`s constitutional or governmental documents, to include language that legally requires the Company to consider the interests of stakeholders if that language has been designed and approved by B Lab for that particular jurisdiction (for example, in the United Kingdom, in Australia and now in Hong Kong). What is the timing? B Lab is aware that changing your legal structure may take some time, so all B Corps have a specific deadline to make the legal change after certification. The specific legal requirements for a company differ depending on the type of legal entity of the company: company, limited liability company, partnership, cooperative, etc. Use the legal requirement tool above and contact your local B Lab or Sistema B team to learn more about how to meet B Corp`s legal requirements in your market. The legal requirement often includes an update of the company`s articles of association or an equivalent relevant document, reinstatement as meritocracy or other structural changes. The timeline for meeting legal requirements varies depending on the size of the business. For more information, see our certification guides. In many jurisdictions, company law (sometimes referred to as “corporate law”) allows for the governance of interest groups, but does not require it. In other places, however, the law does not allow a company to voluntarily adopt stakeholder governance.
In places that do not clearly allow for stakeholder governance, efforts should be made to change the law. Until the law is changed, Certified B Corps will be asked to sign a B Corp agreement in which they agree to amend their incorporation documents or adopt a new legal form if it is enacted by local law. B Corp`s legal framework sets out what language companies must adopt in their government documents and where they are for their commitment to stakeholder governance to be enforceable. Any changes to B Corp`s standard legal framework – including changes to the language wording, the location of the language in the relevant Company documents or the document in which B Corp`s legal framework exists (e.g. articles of association, partnership agreement) – will be reviewed for certification purposes. In the event that taking steps to comply with the legal requirement violates applicable law in the Company`s jurisdiction, the Company will work with B Lab to determine the appropriate legal process. Any changes must be reviewed in advance by B Lab in order to avoid additional delay in the certification or remediation process. It is important to note that Hong Kong`s legal requirement is related to meeting the “governance” requirements of the BIA and that a company takes steps to demonstrate its commitment to meeting the interests of stakeholders. By becoming a B Corp, a company can publicly commit to taking into account the interests of stakeholders and potentially exposed to reputational risk if it does not take this promise seriously. Upon enactment of the Hong Kong legal requirement, the Company may require that new or updated policies and processes be implemented in its governance and in its activities and operations to continue its engagement.
A benefits corporation is a new type of legal entity that aims to achieve a public interest in addition to increasing shareholder value. Our article What is a charitable corporation? provides more details, but in general, benefit companies can be distinguished from traditional companies in the following way: Acceptance of B Corp`s legal requirement is not a requirement under Hong Kong law or regulation, but a B Lab requirement for Hong Kong business entities wishing to certify as a B Corp in order to amend constitutional or government documents, include proposed wording developed with B Lab that integrates stakeholder consideration into entity objects and governance.