Senate Bill 26, the North Carolina Benefit Corporation Act, would create a new class of business or corporation that can claim to be morally superior to the run of the mill greedy corporation that now exists. This bill sponsored by Sens. Don Vaughn (D-Guilford); Richard Stevens (R-Wake) and Eleanor Kinnaird (D-Orange) would create a new filing classification and additional requirements for becoming a “Benefit Corporation.”
Without going into the seven pages of legalese that would create this new structure it is better to look at what companies now do and why this bill is not necessary.
Businesses exist to efficiently convert resources (human and material) into products and services that people want and voluntarily purchase or use. Businesses that fail that test should be allowed to go bankrupt. Think GM & Chrysler and others.
A business, by making a profit, increases the wealth of society and hence the ability of individuals to find employment and increase their standard of living. They also provide products and services that make our lives better.
A lawful, profitable business, by its very existence, already “benefits” society by its products and the wages and taxes generated to name a few ways. We do not need government to designate some business as better than others. If this happens it will not be long before government, at the behest of an interest group, tries to add legislation and laws that give these “benefit” corporations some kind of added financial advantage because they are doing “good” things. Think “green” energy and ethanol subsidies.
A more immediate effect will probably be the increased income of another private corporation, B Corporation, since on page 6 the bill requires:
“An assessment of the social and environmental performance of the benefit corporation, prepared in accordance with a third-party standard applied consistently with any application of that standard in prior benefit reports or…”
It appears that the only “third-party” out there that has developed “standards” is B Corporation and they charge for making it “official.”
SB 26 is an unnecessary piece of legislation and if the sponsors and supporters attended the Civitas Free Market Academy they would understand better how the Free Market really works and let this bill quietly go away. For being an unnecessary piece of legislation that potentially benefits a private operation and shows a misunderstanding of capitalism and the free market SB 26 is this week’s bad bill of the week.
I don’t believe this started with these legislators. Sounds like boilerplate – probably nationwide. Next step will be every Corp., LLC. etc. filling out annual (at first) forms about internal and otherwise private practices, plans and dreams to occupy (for an easy day) some newly hired for-life-bureaucrat, with judgments to follow as to the justification for existence of the entity. Aside from more that I do not have time to write, this is shameful in America. Can anyone imagine Adam Smith? It is far worse than an unnecessary piece of legislation.
Cleveland County created a corporation called “Cleveland Public Utilities Corporation”. A non-profit organization. What is that all about?
I think the writer missed the purpose of this legislation and only read the cover. Benefit Corporation Legislation is a Free Market issue. Businesses should have the right to operate their businesses the way they see fit as long as it does not harm others. This bill would allow businesses the legal right to operate their business with other interest in mind whether they be conservative or liberal. Current law requires the businesses to solely considering maximizing shareholder profits. If they don’t they are potentially subjected to a shareholder lawsuit. If the company and the shareholder wish to use the business for more things other than profit they should have that right in a Free Market, and in fact many of these types of businesses produce a higher rate of return than traditional corporations. Also if I as a business wish to minimize the role of government in society, than it is in my best interest to solve social and environmental issues before government feels the need to step in. I am taking power away from government and placing it in my hands as a business owner.
That is what this bill does. It has nothing to do with government determining morality it always the market place to do that. Is that not what the market place is for?
“Current law requires the businesses to solely considering maximizing shareholder profits”? Really? Please cite said law.