Understanding Benefit Corporations and B Corporations

Benefit Corporations and B Corporations

• Benefit corporations originated in Maryland and have spread to various U.S. states.
• Patagonia, Inc. serves as a prominent example of a benefit corporation.
• B Corporations are certified by B Labs to meet specific social and environmental standards.
• A company can be both a benefit corporation and a B Corporation if it registers with B Labs.
• If a benefit corporation does not register as a B Corporation, it is solely a benefit corporation.
• Non-benefit corporations can still achieve B Corporation status by registering with B Labs.
• Bettr Barista Pte Ltd is recognized as Singapore’s first certified B Corporation.

Flexible Purpose Corporations (FPCs)

• FPCs are a distinct corporate format introduced in California, USA.
• FPCs must outline at least one special purpose in their founding documents (e.g., environmental sustainability).
• They allow boards to weigh special purposes against shareholder value.
• FPCs must provide regular reports on the social and environmental impact of their activities.
• Unlike typical corporations, FPCs can prioritize community and employee interests.

Management Corporations

• Created when a property is subdivided, allowing individual ownership of units.
• Common properties, like elevators and maintenance facilities, are jointly owned by unit owners.
• Management corporations are responsible for managing shared spaces in developments like condominiums and office buildings.
• Disputes over collective property ownership have gained media attention, particularly with developments like Gilman Heights.

Companies Limited By Guarantee

• These entities are established not for profit and serve charitable or educational purposes, such as foundation or university structures.
• Notable examples include the Lee Foundation and Singapore Management University.

Non-Profit Organisations

• Non-profits may generate profits but focus on social objectives rather than profit maximization.
• Members do not expect financial returns, contrasting with for-profit organizations that operate for profit.

Mutual Benefit Organisations

• Members pool resources to support one another in times of need.
• Examples include organizations providing aid during sickness, unemployment, or bereavement.

Corporate Structure

• Companies function as legal entities and consist of various parts including directors, management, and shareholders.
• The board of directors typically contains both executive and non-executive members, with specific roles assigned.

Executive and Non-Executive Directors

• Executive directors are involved in company management while non-executive directors may or may not participate actively.
• Independence of directors can be evaluated through relationship and substance perspectives.
• Audit committees in publicly listed companies must have a majority of independent directors.

Management Roles

• Executives are responsible for daily business operations, headed often by a CEO or Managing Director.
• Roles include Chief Financial Officer, Chief Operating Officer, and other C-level positions focused on various company functions.
• In some structures, the CEO and Chairman roles may overlap, as seen in some major corporations.