On March 30, 2012, Washington become the eighth state to adopt benefit corporation legislation. As of June 7, 2012, firms will be able to incorporate as "Special Purpose Corporations," or existing firms can convert to this new status with at least a two-thirds shareholder vote.
Special Purpose Corporations in Washington are similar to other for-profit firms, except that there will be a social purpose included in the articles of incorporation. A social purpose is defined as some goal related to social responsibility, such as environment, human rights or any other charitable purpose. The idea is that officers and directors of these firms are no longer required to exclusively pursue shareholder financial profits.
The new legislation in Washington State differs slightly from benefit corporation statutes in other states so far. The first main difference is that using a third-party assessment is optional. More specifically, the organizers may optionally include a third-party assessment requirement in the articles of incorporation, but it is not required that they do so. Second, it is optional whether or not to require the officers and directors to consider the social purpose impact of every decision. These modifications to the standard benefit corporation "boilerplate legislation" were intended to give firms more flexibility about how to accomplish their social purpose.
A full list of states with benefit corporation statutes is available on my website, along with a listing of companies that have adopted this new corporate entity type.
Craig R. Everett, PhD
Graziadio School of Business and Management