We are celebrating the second full year of public benefit corporations in Minnesota. Public benefit corporations are for-profit corporations that have elected to add a social “benefit” purpose in addition to a general business purpose. This additional social purpose allows public benefit corporations to elevate pursuing a social good through business to a status at least equal to profit making.
Annual Benefit Report
Minnesota’s Public Benefit Corporation Act was enacted in the Spring of 2014 with the first public benefit corporations being formed in Minnesota on January 2, 2015. In 2015 we had 60 public benefit corporations in Minnesota and as of the end of 2016 we had 79 public benefit corporations. In February 2017, Minnesota saw an explosion of PBCs with five filing with the Secretary of State’s office, up from a previous average of two a month.
One of the unique features of the benefit corporation is the requirement to file an Annual Benefit Report. Prior to April 1, all public benefit corporations must file their Annual Benefit Report with Secretary of State that covers the previous year.
If a public benefit corporation does not file its report by the April 1 deadline, the Secretary of State will revoke the public benefit corporation’s status as a public benefit corporation. In order to get reinstated as a public benefit corporation, the organization must pay $500 and file a renewal with the secretary of state within thirty days of the revocation.
2017 Annual Benefit Reports
At the end of February 2017, the Secretary of State’s Office had received reports from only 7% of PBCs. However, as the April 1 deadline approached, the Secretary of State saw a huge uptick in number of reports submitted. Of the 79 PBCs, 53 filed their report by the deadline. 26 PBCs had their status revoked. All of the submitted 2017 Public Benefit Corporation Annual Reports can be found on the Secretary of State’s website.
While drafting, and filing Annual Benefit Reports can seem like a burdensome chore, these reports actually serve an important role. These reports provide transparency to the public and serve as an opportunity to celebrate what is possible and what is now in the social business world. The reports provide a social business the vehicle and mechanism to demonstrate to the state and the world how businesses can do well and do good at the same time. To see the quintessential embodiment of the spirit of an Annual Benefit Report see Kickstarter’s 2016 Benefit Statement.
This article was written by attorney Kim Lowe.