This week, Delaware passed legislation providing for the creation of “benefit corporations,” which require board directors to balance social mission with the bottom line. In advance of the news, Professor Dana Brakman Reiser spoke to the Wall Street Journal about such companies. Among the potential drawbacks, Professor Brakman Reiser said, are the limited pool of potential investors and the questionable appeal of this new structure. Directors also could have “broad cover to act in ways investors might not like,” she said, which could “leave investors with little leverage if they don’t think the company is doing as well as it should financially or achieving its social mission.” Professor Brakman Reiser’s article in the Wake Forest Law Review, “Benefit Corporations – A Sustainable Form of Organization?,” examines the topic in more depth.
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