Formerly in New York State, businesses could operate as one of six different types: a business corporation, not-for-profit corporation, limited liability company, general partnership, limited partnership, or sole proprietorship. If Governor Cuomo signs the bill, businesses will be given a seventh option – the benefit corporation. A business corporation can incorporate under New York State law by filing a Certificate of Incorporation under Section 402 of the Business Corporation Law. Businesses must pay a filing fee of $125 as well as the additional tax on shares. Corporations may amend their Certificate of Incorporation under Section 805 of the Business Corporation Law by filing a Certificate of Amendment and paying a $60 filing fee. The Certificate of Amendment can amend any of the information found in the Certificate of Incorporation including name change and revision of the purpose clause

Dermady, Amanda

English

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Cornell University ILR School 
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Buffalo Commons Centers, Institutes, Programs 
10-30-2011 
Benefit Corporation Legislation in New York: What's the Benefit 
Amanda Dermady 
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Benefit Corporation Legislation in New York: What's the Benefit 
Abstract 
Formerly in New York State, businesses could operate as one of six different types: a business 
corporation, not-for-profit corporation, limited liability company, general partnership, limited partnership, 
or sole proprietorship. If Governor Cuomo signs the bill, businesses will be given a seventh option – the 
benefit corporation. A business corporation can incorporate under New York State law by filing a 
Certificate of Incorporation under Section 402 of the Business Corporation Law. Businesses must pay a 
filing fee of $125 as well as the additional tax on shares. Corporations may amend their Certificate of 
Incorporation under Section 805 of the Business Corporation Law by filing a Certificate of Amendment 
and paying a $60 filing fee. The Certificate of Amendment can amend any of the information found in the 
Certificate of Incorporation including name change and revision of the purpose clause. 
Keywords 
Buffalo, Economic Development, High Road Economic Development, Fact Sheet, PPG, PDF 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/buffalocommons/248 
Benefit Corporation Legislation
 
    
 
 
 
 
 
 
 
 
 
 
 
 
What is a Benefit Corporation?
A benefit corporation is a new type of 
authorized in seven states, that is 
environmentally conscious
corporation has a corporate responsibility to create a positive impac
society and the environment and a fiduciary duty to consider more than 
just profit when making decisions.  Benefit corporations must report on 
the public benefits they create as well as their financial performance
 
What States Have Passed Benefit Corporation Legislation?
As of October 2011, seven
legislation: California, Hawaii, Virginia, 
Jersey, and New York.
signature of Governor Cuomo to take effect.
 
What Does New York’s Benefit Corporation Law Require 
from Businesses?
New York’s law, passed in 2011, requires three things of a benefit 
corporation4: 
 
(1) Corporate Purpose:  
corporate purpose that includes c
This is defined in the legislation as “a 
FACT SHEET    
 
 
 
 
 in New York
What’s the Benefit? 
 
Amanda Dermady 
 
 
corporation, currently 
chartered to be socially and 
 as well as to make a profit.1  A benefit 
 states have passed benefit corporation 
Maryland, Vermont, New 
3
  New York’s law, however, still awaits the 
 
 
A benefit corporation must have a 
reating general public benefit.  
material, positive impact 
      
:  
t on 
.
2
 
 
October 30, 2011                                                 
2 
 
on society and the environment.”5  The corporate purpose is the 
main focus of the company.  It may limit some of the 
corporation’s other purposes, such as profit-making, and takes 
priority over any inconsistent purpose.6 
 
(2) Considering More Than Profits:  The Board of Directors of a 
benefit corporation 
must consider the 
effects of its actions 
on the corporation’s 
public benefit 
purpose, its 
shareholders, its 
employees, 
subsidiaries and 
suppliers, the 
interests of its 
customers and beneficiaries, community and societal 
considerations, the local and global environment, and the short 
and long term interests of the benefit corporation.7 
 
(3) Annual Benefit Report:  Lastly, a benefit corporation is 
required to deliver an annual report to its stockholders.  In this 
report, corporations must include: how the benefit corporation 
pursued general public benefit during the preceding year and 
how much public benefit was created, how the corporation 
pursued the specific public benefit in its charter and how much 
benefit was created, and any circumstances that hindered the 
corporation’s ability to enhance public benefit.8  The report 
must also assess the corporation’s overall social and 
environmental performance.9 
 
How Does Incorporation Work in New York State? 
Formerly in New York State, businesses could operate as one of six 
different types: a business corporation, not-for-profit corporation, 
limited liability company, general partnership, limited partnership, or 
sole proprietorship.10  If Governor Cuomo signs the bill, businesses 
will be given a seventh option – the benefit corporation. 
 
A business corporation can incorporate under New York State law by 
filing a Certificate of Incorporation under Section 402 of the Business 
Corporation Law.11  Businesses must pay a filing fee of $125 as well as 
the additional tax on shares.12  Corporations may amend their 
Certificate of Incorporation under Section 805 of the Business 
Corporation Law by filing a Certificate of Amendment and paying a 
$60 filing fee.13  The Certificate of Amendment can amend any of the 
information found in the Certificate of Incorporation including name 
change and revision of the purpose clause.14 
 
How Can a Business Incorporate as a Benefit Corporation? 
3 
 
A business incorporating for the first time can 
simply elect to incorporate as a benefit corporation, 
instead of another type of business.15 The procedure 
is the same as incorporation for any other type of 
corporate structure.16  An existing business can 
elect to become a benefit corporation by amending 
its Certification of Incorporation and passing the 
amendment by the minimum state vote17 (usually a 
two-thirds majority vote of shareholders18). 
 
Can a Business in New York State Incorporate as a Benefit 
Corporation Today? 
No.  Even though the S-79 Benefit Corporation 
Bill passed both the New York State Senate 
and House, it still sits on Governor Andrew 
Cuomo’s desk.19  The benefit corporation 
legislation needs the signature of the governor 
before it can take full effect.20 
 
What is the Idea behind the Legislation?  
As Heather Van Dusen from B Lab states, “the current corporate 
structures in America don’t work for the kind of economy that we need 
to move towards.”21  The new benefit corporation legislation allows 
businesses to move away from current corporate structures and toward 
a structure that allows companies to be more focused on public 
benefits and less focused on the bottom line.22  Benefit corporation 
laws remove a key barrier: the legal duty of a corporation to maximize 
shareholder returns, even at the expense of the public good.23  With a 
typical corporation, a shareholder can sue a company for reducing its 
profit margin to promote the public good.  With a benefit corporation, 
the company is free to pursue the public good as well as private 
profits.24 
 
Why Would a Business Want to Become a Benefit 
Corporation? 
Benefit corporation 
legislation makes it possible 
for an environmentally or 
socially conscious business 
to merge its beliefs with the 
company’s business model.  
As discussed above, 
companies incorporated as a 
benefit corporation have a 
legal duty to consider other 
factors besides profit when 
making business 
decisions.25 This provides clarity to the company’s Board of Directors 
and other officers that their fiduciary duty includes pursuing the 
corporation’s public benefit purpose.  Even when companies 
4 
 
experience liquidation – when the company is terminated and its assets 
and property are redistributed – decisions must be focused on the 
company’s stated public benefit.  This also gives benefit corporations 
legal protection when promoting the non-financial interests of its 
employees, the community, and the environment.26 
 
 
 
Additionally, businesses may want to become benefit corporations to 
increase accountability to their investors.27  Benefit corporations 
expand shareholder rights by giving them the right to enforce the new 
definition of fiduciary duty and to hold the company to its new set of 
standards.28   
 
Lastly, benefit corporations can use their classification as a competitive 
advantage.  It differentiates the company from others in the 
marketplace in a way that the “organic” label does.  Where many 
companies claim to be environmentally and socially responsible, 
benefit corporations can prove it.29 
 
Why Are Benefit Corporations Important? 
Benefit corporation legislation is a huge step forward in the sustainable 
business movement.30  Benefit corporations can shape their business 
model to serve both shareholders and society, and can consider the 
impact of their decisions on multiple 
stakeholders including employees and 
the local community.31  Additionally, 
benefit corporation legislation shows 
that company profit and public benefit 
are not mutually exclusive.32  Benefit 
corporations can show other companies 
that socially and environmentally 
friendly business practices can actually 
improve a company’s profitability.33 
 
Benefit corporations ‘legitimize [the]...development of the sustainable 
business movement by providing legal recognition for businesses that 
adopt higher standards of corporate purpose” to promote public 
benefit.34  Additionally, they promote trust in business by showing the 
public that businesses are willing to be held accountable for their 
actions and want to work to promote environmental and societal 
benefits as a part of their business practice.35  Lastly, benefit 
corporations further the development of standards for determining the 
overall social and environmental performance of a business.36 
 
                                                            
1Buffalo First, Benefit Corporations (2011), http://www.buffalofirst.org/bcorps. 
2
 William H. Clark Jr., Benefit Corporation – Business FAQs, 
http://www.bcorporation.net/resources/bcorp/documents/Benefit%20Corporation%20
-%20Business%20FAQs-1.pdf. 
5 
 
                                                                                                                                                
3
 Passed B Corp Legislation, B Lab (2011), 
http://www.bcorporation.net/publicpolicy. 
4
 New York State Senate, S79-2011: Authorizes the incorporation of benefit 
corporations, §§1706-08, (Jan. 5, 2011) available at 
http://open.nysenate.gov/legislation/bill/S79-2011. 
5
 Id. at Summary of Provisions. 
6
 Id. at §1706. 
7
 Id. at §1707. 
8
 Id. at Summary of Provisions. 
9
 Id. 
10
 Department of State, NYS Division of Corporations, State Records and UCC, 
Business Corporations FAQs (last visited Oct. 20, 2011), 
http://www.dos.ny.gov/corps/bcfaq.asp#busoper. 
11
 Department of State, NYS Division of Corporations, State Records and UCC, 
Business Corporations Filings (last visited Oct. 20, 2011), 
http://www.dos.ny.gov/corps/buscorp.html#certinc. 
12
 Id. 
13
 Id. 
14
 Id. 
15
 New York State Senate, S79-2011: Authorizes the incorporation of benefit 
corporations, §1703, (Jan. 5, 2011) available at 
http://open.nysenate.gov/legislation/bill/S79-2011. 
16
 William H. Clark Jr., Benefit Corporation – Business FAQs, 
http://www.bcorporation.net/resources/bcorp/documents/Benefit%20Corporation%20
-%20Business%20FAQs-1.pdf. 
17
 New York State Senate, S79-2011 at §1704. 
18
 Benefit Corporation – Business FAQs, supra note 16. 
19
 Jay Coen Gilbert, Clinton and Cuomo Make History, B Lab Blog (Sept. 20, 2011), 
http://blog.bcorporation.net/2011/09/clinton-and-cuomo-make-history/. 
20
 Id. 
21
 New Legislation Opens State to Benefit Corporations, supra note 21. 
22
 Id. 
23
 New York State Senate, S79-2011 at Justification. 
24
 Id. 
25
 Id. at §1707. 
26
 Id.  See also New York State Senate, S79-2011 at §1707. 
27
 Benefit Corporation – Business FAQs, supra note 28. 
28
 Id. 
29
 Id. 
30
 Id. 
31
 Id. 
32
 Sheldon Silver, Assembly Passes Legislation to Allow Benefit Corporations in New 
York, New York State Assembly News Release, June 17, 2011, available at 
http://www.assembly.state.ny.us/Press/20110617a/. 
33
 Id. 
34
 Benefit Corporation – Business FAQs, supra note 28. 
35
 Id. 
36
 Id. 
 
 
 
____________________________________________________________ 
 
Partnership for the Public Good    
www.ppgbuffalo.org    
237 Main St., Suite 1200, Buffalo NY 14203 
______________________________________________________ 


Benefit Corporation Legislation in New York: What\u27s the Benefit

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