Arizona companies can file as B-corporations, provide public benefit

PHOENIX — Some of Arizona’s corporations might soon be taking more than just profits into account when determining its level of success.

The primary purpose for an average corporation is to make its shareholders money, however corporations in Arizona can now choose to do business in an effort to not only make money, but also to provide a “general public benefit.”

These new types of corporations in Arizona are called B-corporations, or benefit corporations, and Ruth Carter, owner and attorney of Carter Law Firm, said filing as a B-corporation gives a company to the ability to have two agendas.

“The company has two goals, one goal is to make money for its shareholders and its other goal is to promote some kind of public good,” she said. “So with a regular corporation, if the company is not maximizing profits for its shareholders, the shareholders can actually sue the company for not making them more money.”

The Arizona State Legislature and former Gov. Jan Brewer passed SB 1238 in 2013 to allow benefit corporation status is Arizona and after more than a year of preparation, companies can now file as a B-corporation with Arizona Corporation Commission, Carter said.

Existing corporations can covert to a B-corporation, while new companies can opt to be a B-corporation while filing its Articles of Incorporation with the ACC.

While there are no tax or direct governmental incentives to file as a B-corporation, Carter said it allows a company to accomplish a social benefit without running the risk of repercussions from investors.

“The shareholders go into it knowing that, ‘Yes they’re going to make me money, but we may not make as much as we could if we weren’t a B-corporation because we have a social good that we also want to accomplish,” Carter said.

One example of a B-corporation is Vermont-based Ben and Jerry’s, which alongside selling ice cream and dairy products, also aims to provide higher wages for its employees and utilize environmentally friendly business practices.

Besides providing a social good, Carter said obtaining B-corporation status could be a strong selling point to consumers.

“I think this is beneficial for Arizona and people in general,” Carter said. “I think people want to support companies that are in business to do more than make money.”

More information on Arizona’s requirements to be considered B-corporation can be found here.

Related

2 Phoenix officers arrested following investigation into violent traffic stopPhoenix breaks 15-year-old daily heat record as extreme heat warning extendedMotorcyclist seriously injured after crashing while fleeing DPS in ScottsdaleTexas judge denies Karmelo Anthony’s request for new trial in deadly stabbing at track meet2 sentenced for helping cover up murder of Navajo man in ArizonaWhat to know about Trump’s 50% tariffs on Canadian goods that just went into effect