When insurer Lemonade recently completed its IPO, it did so as a “public benefit corporation” – that is, a corporation chartered to allow it to have a public benefit purpose, in addition to the traditional profit maximization model. Lemonade’s IPO has raised the question whether other companies will follow this model, including in particular whether other IPO companies will complete their listings as a public benefit corporations. The possibility that other companies may adopt the public benefit corporation model raises a number of questions, including in particular questions concerning the duties and potential liabilities of public benefit corporation directors, as discussed below.
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The Benefit Corporation Concept and Related Director and Officer Liability Issues
A fundamental tenet of corporate law is that a business corporation is organized and carried on for the benefit of its stockholders. In recent times, an increasing number of for-profit organizations have formed in order to pursue social and environmental goals. There is a growing investor movement toward the financial support of organizations that have