Facilitating Stakeholder-Interest Maximization: Accommodating Beneficial Corporations in the Model Business Corporation Act

Authors

Rakhi I. Patel, UCLA School of Law

First Page

135

Document Type

Article

Abstract

This Article seeks to add to the literature by examining scenarios in which a separate B Corporation corporate form would provide a solution to the problems detailed above, and by proposing that the ABA enact a Beneficial Corporation provision in its Model Business Corporation Act to specifically address this issue. The MBCA has been adopted either in whole, or in substantial part, by over thirty states. As such, amending the MBCA to reflect a new B Corporation form would promote wide acceptance in many states' corporate laws. States, such as Vermont, Minnesota, and California, have already passed or are working on drafting amendments to their corporate laws that would provide for this type of new corporate form to straddle the for-profit and nonprofit sectors. The Article proceeds as follows: Part II provides a background on how beneficial corporations are being structured currently, including different forms proposed by national and state governments to allow for-profit companies to pursue public, social, or environmental agendas. Part III details scenarios in which beneficial corporation directors are likely to run into conflict between the corporate charter mandates, fiduciary duties to shareholders, and their own self-interest. Part IV provides recommendations for provisions the ABA should enact in the Model Business Corporation Act ("MBCA") and discusses how these proposals potentially resolve the conflicts detailed in Part III.

Recommended Citation

Rakhi I. Patel, Facilitating Stakeholder-Interest Maximization: Accommodating Beneficial Corporations in the Model Business Corporation Act, 23 St. Thomas L. Rev. 135 (2010).
Available at: https://scholarship.stu.edu/stlr/vol23/iss1/5