Effective January 1, 2015, Minnesota businesses may elect to be a Public Benefit Corporation (PBC). A PBC is different from a corporation or a limited liability company in that it is required to serve a public benefit rather than just private shareholders’ benefit.
There are three types of public benefit corporations:
- A general benefit corporation that elects to pursue a general public benefit for society, the environment and/or the well-being of present and future generations;
- A general benefit corporation that elects to pursue a specific public benefit; or
- A specific benefit corporation that elects to pursue a specific public benefit, other than shareholders.
An existing corporation or LLC may become a PBC by conversion or merger. Any change must be approved by two-thirds vote of all shareholders. Dissenting shareholders may exercise the dissenters’ rights for the fair market value of the stock.
While the State of Minnesota does not have a lot of experience with PBCs, it is expected that one consequence of a PBC is that it will change fiduciary duties of care, loyalty and good faith of managers and directors of corporations. Managers and directors of PBCs will have a fiduciary duty to promote the public benefit of the PBC, in addition to the interest of shareholders.
In some cases, corporations and LLCs have elected to become a public benefit corporation as a marketing strategy to promote the public benefit work of the business.