Benefit Corporations as a Distraction: An Overview and Critique

Benefit corporation legislation has rapidly disseminated in the United States. Its advocates claim it is a necessary corporate form to address the unique needs of for-profit social enterprises, despite many scholarly and legal practitioners who doubt the need for or wisdom of adopting this organizational form. Others suggest that the legislation is flawed and deficiencies should be addressed. After reviewing the present status of benefit corporation legislation, this article contributes to the discourse arguing that (1) benefit corporations are unnecessary under the law; (2) benefit corporation legislation does not enhance corporate law; (3) benefit corporation laws create unnecessary new legal risks for both traditional and benefit corporations, and their respective directors; and (4) third party certification in entity formation law is inappropriate.