What is a Benefit Corporation?

A newly passed legislation in Alabama recognizes benefit corporations as an entity type. A benefit corporation is a for profit entity that aims to benefit both its shareholders as well as the general public in some way. In short, benefit corporations are traditional corporations with modified obligations that commit them to higher standards of purpose, accountability, and transparency. The primary purpose of a benefit corporation is to generate profit along with benefiting the public in some way.

What can I do with a Benefit Corporation?

  • pursue environmental goals

  • create positive social impact

  • promote accountability

  • remain mission driven

  • promote transparency

How will it help my business?

% of employees prefer working for socially responsible companies(77% of millenials choose which company to work for based on their values)
% of consumers are willing to pay more to companies who care about social & environmental issues
% of reviewed sources found that companies with robust sustainability practices demonstrate better operational performance, which ultimately translates into cash flows. This is why Benefit Corporations are favored by investors.

What are the reporting requirements for a Benefit Corporation?

  • A narrative description of any hindrances that occurred, the process for selecting/changing the third-party standard used to prepare the benefit report, the ways in which the Benefit Corporation pursued either the general public benefit throughout the year & how it was created or a specific public benefit that the articles state is the purpose of the Benefit Corporation to create.

  • An evaluation of the overall social & environmental performance of how the benefit corporation did against a third party standard.

  • Additional information to include is the name & address of benefit director & benefit officer, compensation paid throughout the year to each director, a statement from the benefit director discussing whether the b corp acted in accordance with guideline & whether or not directors complied with their duties, and the name of everybody that holds 5% or more of the outstanding shares of the benefit corporation either beneficially, to the corporations knowledge (without independent investigation), or of record.

How to Form an Alabama Benefit Corporation

Form your business with the Alabama Secretary of State’s Office (there is a $200 filing fee)

> Visit sos.alabama.gov/business-entities
> Determine the registered agent
> Complete a Domestic Corporation Form


The name of a benefit corporation must contain the words “benefit corporation”, the abbreviation “B.C.” or the designation “BC”, and may not use the word “incorporated or an abbreviation thereof

The certificate of Incorporation must include a statement that the corporation is subject to the benefit corporation chapter of the corporation law