Lawmakers approve 'benefit corporation' status
A proposed law would let corporations focus less on profits and more on their mission without stirring trouble with shareholders.
House Bill 2423 creates a new incorporation class in Oklahoma, called a "benefit corporation." Similar laws have been adopted in at least 36 states. Oklahoma's version has passed both the House and Senate, and now awaits the governor's signature.
Among those states that already recognize the benefit company model, there are nearly 5,000 registered benefit companies, including Kickstarter, Method Home Products and Lung Biotechnologies, said Senate author Julia Kirt, D-Oklahoma City.
While officers at a traditional corporation have a responsibility to earn a profit for shareholders, a benefit corporation can be more transparent about decisions to protect the environment, encourage civic growth or grow employment in a depressed area.
"Up front, the shareholders know that profit isn't the only thing they're measuring," Kirt said. "If you did go public, certainly you could have a direct shareholder lawsuit if you didn't make decisions that looked like they were leading to immediate short-term payouts to shareholders."
The law is supported by two very different Oklahoma businesses. Bama Cos. is a Tulsa-based manufacturer that makes frozen bakery products for restaurants worldwide. Even without House Bill 2423, it earned a B Corp certification from the nonprofit B Lab.
Factory Obscura is an artist collective in Oklahoma City that also pushed for the law. Co-founder Kelsey Karper said Factory Obscura incorporated in Delaware to get benefit corporation status and would consider moving the company's headquarters to Oklahoma if the law is signed.
"It creates some administrative loops we have to jump through being incorporated in Delaware but doing business in Oklahoma, but we're very committed in being in Oklahoma. We would like for it all to be here," Karper said.
Oklahoma is a generous state, she said. It's just that not many people know what a benefit corporation is or why it's useful. Even Kirt said the only speed bumps she faced in the Legislature were from lawmakers who asked why it's not easier to just form a nonprofit.
Kirt replied that it's not a comparable situation because nonprofits aren't established for the sale of goods or services.
The team at Factory Obscura has strong values they're pursuing, Karper said.
"So we wanted to make sure it was clear that everyone who works with us, from our community partners to our investors, that we have a commitment to our community and that's built into everything we do," she said.