The benefits of incorporating in Delaware are widely understood within the business industry. It is partially because Delaware is a corporate tax haven, most corporate attorneys understand Delaware state business law and Delaware has a court that specializes in corporate challenges that Delaware incorporation is so popular. In fact, nearly two-thirds of Fortune 500 companies as well as approximately half of all publicly traded companies in the U.S. are incorporated in Delaware, “The First State.”
It is therefore understandable why it would be advantageous for public benefit corporations to incorporate in Delaware. Because even though public benefit is one of the primary purposes of this kind of legal structure, public benefit corporations remain beholden to shareholders. They are therefore subject to many of the same kinds of regulations and financial obligations which affect the kinds of strictly for-profit businesses that may benefit from Delaware incorporation generally. Here are some tips about forming beneficial corporation also known as PBC company.
The process of forming this kind of corporation is fairly technical in nature. Therefore, it is generally a good idea to seek out the advice of legal counsel experienced in Delaware incorporation regulations. Failure to follow even a single step of the incorporation process could leave your corporation vulnerable to liability or unable to properly commence operations. Navigating this process with the aid of an experienced attorney will help you to mitigate the risks of unintentional missteps.
The process of forming a public benefit corporation is different if a company is already incorporated in Delaware, incorporated outside of Delaware or not currently incorporated at all. This is another reason why discussing this transition with an attorney is helpful. But regardless of your company’s current legal structure (or lack thereof) the essential steps remain the same. Public benefit corporations must be properly structured and must be properly incorporated in Delaware.
Forming a Public Benefit Corporation in Delaware
Of primary importance in the formation process is ensuring that your company meets the “public benefit” purposes required by law. Specifically, you must indicate on your Certificate of Incorporation which public benefit purposes and/or benefits your business aims to promote. It is worth noting that these purposes may be relatively broad or specific but must generally fall into one of the following categories: scientific, economic, artistic, religious, cultural, literary, charitable, technological, medical, educational or environmental.
There are other regulatory requirements associated with this kind of legal structure for a beneficial corporation that do not necessarily apply to other legal structures. For example, public benefit corporations in the state need to retain the services of a Delaware Registered Agent. In addition, they need to be able to detail progress made towards the public benefit goals or purposes on a biannual basis, at minimum.
Experience You Can Trust
If you are interested in forming a Delaware public benefit corporation, please consider reaching out to the team at LawTrades. We have extensive experience helping businesses incorporate in Delaware and beyond. We are also eager to help with any other legal aspect of getting your public benefit corporation off the ground that you may benefit from assistance with.