Benefit Report Requirements

HOW TO MEET REPORT REQUIREMENTS FOR YOUR BENEFIT CORPORATION

What is a benefit report?

If you’ve formed a benefit corporation, either annually or biennially (depending upon your state’s statute), as part of meeting the transparency requirements of benefit corporation, you’ll be required to create a benefit report for your shareholders. The benefit report is basically a narrative containing the goals of your benefit corporation—both the financial and beneficial goals—and how your benefit corporation set about meeting those goals and how well it performed. The benefit report, in all states except Delaware, is also required to show how well your benefit corporation performed socially and environmentally against a third-party standard.

Do I need to submit the benefit report anywhere?

All states require that benefit corporations prepare a benefit report for their shareholders and post a copy of the benefit report on their website, if the corporation has one. In most states, the financial information concerning the pay of officers and directors can be omitted when posting the report online. However, a handful of states require that you submit a copy of the benefit report to the state as well.

Which states require that I file a copy of the benefit report with that state?

The following states require benefit corporations file their benefit reports with the secretary of state or corporations division:

  • Arkansas ($70 filing fee)
  • Massachusetts ($75 filing fee)
  • New Jersey ($70 filing fee)
  • New York (no filing fee)
  • Pennsylvania ($70 filing fee)
  • Rhode Island ($10 filing fee)
  • South Carolina (no filing fee)
  • Utah ($70 filing fee)
  • Washington D.C. (benefit report filed with the mayor’s office; no filing fee)

What needs to be included in a benefit report?

A complete benefit report should include the following:

  • A narrative describing (a) the way the benefit corporation pursued the general public benefit and the extent to which it was successful in doing so; (b) the ways the benefit corporation attempted to create the specific public benefit as indicated in its articles of incorporation; (c) any circumstances that hindered the creation of the public benefits; (d) the process of selecting the third-party standard by which the benefit corporation has measured itself socially and environmentally.
  • An assessment of the benefit corporation’s overall environment and social performance against a third-party standard (not required in Delaware, unless otherwise specified in the benefit corporation’s bylaws).
  • The name(s) of the benefit director(s) and the benefit officer(s), as well as a compensation statement and a statement indicating how well the director(s) and officer(s) performed The performance statement must describe the ways in which the director(s) and officer(s) did or did not comply with their duties.
  • The name of each person that owns five percent or more of the outstanding shares of the benefit corporation.

Is there anywhere I can find an example of a benefit report?

Fortunately, since benefit corporations are required to post their benefit reports online, you should be able to easily find an example on a company’s website. You can find great examples here:

Dancing Deer Baking Co. Annual Report
Network for Good

Patagonia Works