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42 Del. J. Corp. L. 77 (2017-2018)
Why Public Benefit Corporations

handle is hein.journals/decor42 and id is 81 raw text is: WHY PUBLIC BENEFIT CORPORATIONS? MICHAEL B. DORFF* ABSTRACT Public Benefit Corporations (PBCs) are a revolutionary new form of business organization that overturn the fundamental corporate principle ofshareholder wealth maximization. Of the many questions that surround this new entity type, perhaps the most perplexing is why Delaware - the most influential and important state for corporate law by far - chose to adopt it. I explore this troubling question through qualitative empirical research. Ifind that Delaware primarily wanted to serve the needs of social entrepreneurs and financiers, but also hoped to harness the power of capitalism to remedy social ills that government has so far failed to fix. The PBC statute rather poorly implements either of these goals. The PBC statute is not a very good enforcement tool. On the other hand, the statute may prove an effective reinforcement tool, aiding sincere social entrepreneurs to pursue their various missions. Also, private ordering, such as certflication by outside entities like B Lab, may fill many of the important gaps left by the law. TABLE OF CONTENTS I. INTRODUCTION ..........................................78 II. HISTORY OF BENEFIT CORPORATIONS ........... ............ 82 III. DELAWARE'S MOTIVES..................................86 IV. DOES THE STATUTE MEET DELAWARE'S GOALS? ..............94 A. Meet Entrepreneurs' Needs ............... ............. 95 1. Protect ......................................95 2. Brand................................. ......102 3. Express............ ................. ......107 B. Foster Social Good...................... ........108 V. CONCLUSION ........................................ ......111 * Downer Chair of Corporate Law and Professor of Law, Southwestern Law School. I would like to thank Afra Asharipour, William Bratton, Jill Fisch, Ronald Gilson, Sean Griffith, Frank Partnoy, Elizabeth Pollman, Gordon Smith, Hillary Sale, Steven Davidoff Solomon, Randall Thomas, Robert Thompson, and Verity Winship for helpful comments and suggestions. I would also like to thank Eman Al-Hassan for her outstanding research assistance in finding benefit corporation founders and persuading them to be interviewed for this project. 77

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