D. Business Corporations
Community enterprises can adopt the legal form of business corporations established under existing
incorporation legislation. Indeed, this is the structure recommended by the Canada Revenue Agency for
registered charities that have engaged in or are considering an “unrelated” business activity.
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The essential objective recognised by corporate law and theory is the maximization of shareholder value.
It is possible for business corporations to adopt other objectives, such as community or environmental
benefit, and for corporate shareholders to enshrine these objectives or values in formal incorporation
documents. In the United States, the term “B Corporation” is applied to a voluntary certification system
created by a non-profit organization called B Lab, which describes the term this way:
“B Corporations are a new type of corporation which uses the power of business to solve social and
environmental problems. B Corporations are unlike traditional responsible businesses because they:
• Meet comprehensive and transparent social and environmental performance standards.
• Institutionalize stakeholder interests.
• Build collective voice through the power of a unifying brand.”
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This approach is an encouraging variation on the traditional business corporation, indicating momentum
for more than just maximizing shareholder value. Some Canadian corporations have now been certified
by B Lab as B Corporations. But this approach has some shortcomings. First, it is purely voluntary, and
shareholders can ultimately revise incorporation documents to reassert shareholder primacy. Second, the
certification system has no formal regulatory or enforcement authority and no legislative foundation. And
third, it does not represent formal recognition by the state of the validity and importance of community
enterprise.
It appears that these shortcomings have been noted by U.S. legislators. In April 2010, the State of
Maryland passed legislation officially enabling and legitimizing “Benefit Corporations.”
Key features of the new law are:
• Explicit recognition that public benefit purposes (e.g. positive environmental or community
impacts) may be adopted by corporations;
• An obligation on directors to pursue those purposes and consider the interests of stakeholders
(employees, community, etc.);
• Confirmation that the maximization of shareholder value is not the dominant duty of directors,
and legal protection for directors who pursue public benefits;
• A requirement that Benefit Corporations publish annual Benefit Reports that document
performance in achieving their public benefit purposes; and
• A 2/3 shareholder vote requirement for changes to the control, purpose, or structure of a Benefit
Corporation.
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Other states are reported to be considering similar legislative initiatives.