Public(ly oriented) companies: B corporations and the delaware stakeholder provision dilemma

Vanderbilt Law Review

Volumn 64, Issue 4, 2011, Pages 1311-1346

  Haymore, Steven J ^a  

^a VANDERBILT UNIVERSITY   (United States)

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EID: 79960752545     PISSN: 00422533     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (134)

1. Franklin D. Roosevelt, First Inaugural Address (Mar. 4, 1933) (transcript available in the National Archives), available at http://arcweb.archives.gov/ arc/action/ExternalIdSearch?id=197333.
2. Bill Gates, Address at Harvard Commencement (June 7, 2007), in HARV. GAZETTE, June 2007, available at http://news.harvard.edu/gazette/story/2007/06/ remarks-of-biU-gates-harvardcommencement-2007/.
3. The founders of BWB were selected as Business Week's "Most Promising Social Entrepreneurs" in 2009. Nick Lieber, The Most Promising Social Entrepreneurs, BLOOMBERG BUSINESSWEEK, May 1, 2009, http://www.businessweek.com/ smallbiz/content/may2009/sb2009051-730988.htm?chan=smallbiz-smallbiz+index+page- top+small+business+8tories.
4. Overview: The Online Bookstore With a Soul, BETTER WORLD BOOKS, http://www.betterworldbooks.com/info.aspx?f=fact8 (last visited Apr. 18, 2011).
5. Frequently, social enterprises are said to have a "double bottom-line" or a "triple bottom-line." A company with a double bottom-line measures its success by profit and commitment to people, whether employees or members of the community. Those with a triple bottom-line measure their success similarly, but also take into consideration the environment. Thomas Kelley, Law and Choice of Entity on the Social Enterprise Frontier, 84 TUL. L. REV. 337, 339-45 (2009). For a broader discussion
6. see Alissa Mickels, Note, Beyond Corporate Social Responsibility: Reconciling the Ideals of a For-Benefit Corporation with Director Fiduciary Duties in the U. S. and Europe, 32 HASTINGS INT'L & COMP. L. REV. 271, 274 (2009), although it should be noted that Mickels confuses double bottom-line for triple bottom-line, and vice versa.
7. See, e.g., Megan Scudellari, The Profits of Nonprofit, 25 SCIENTIST 54 (2011), available at http://fl000scientist.com/article/display/57891/ (quoting OneWorld Health Founder Victoria Hale as stating that "[t]echnology is way advanced, and it's the business models that are lagging way behind, limiting what social entrepreneurs are able to accomplish." OneWorld Health was the first nonprofit pharmaceutical company in the United States.).
8. Hannah Clark Steiman, A New Kind of Company, INC. COM, July 1, 2007, http://www.inc.com/magazine/20070701/priority-a-new-kind-of-company.html.
9. 2 emissions reduction, improved indoor environmental quality, stewardship of resources, and sensitivity to their impact. Intro-What LEED Is, U. S. GREEN BUILDING COUNCIL, http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1988 (last visited Mar. 26, 2011).
10. Among others, a B Corporation may be incorporated as a C corporation, S corporation, LLC, partnership, LLP, LP, sole proprietorship, or cooperative. Legal Roadmap, BCORPORATION. NET, http://survey.bcorporation.net/become/legal. php (last visited May 11, 2011). Nonprofit entities cannot receive B Corporation certification.
11. About Certified B Corps, BCORPORATION. NET, http://www.bcorporation.net/ about (last visited Mar. 26, 2011).
12. Legal Framework, BCORPORATION. NET, http://www.bcorporation. net/become/legal (last visited May 11, 2011);
13. The Business Case for Becoming a B Corporation BCORPORATION. NET, http://www.bcorporation.net/resources/bcorp/documents/The%20Business%20Case- Become%20a%20B%20Corporationl.pdf (last visited Mar. 26, 2011).
14. See generally Steven J. Schueth, Socially Responsible Investing in the U. S., 43 J. BUS. ETHICS 189 (2003).
15. Legal Framework, supra note 15.
16. BCORPORATION. NET, http://www.bcorporation. net (last visited May. 9, 2011).
17. Some examples of important unanswered questions surrounding B Corporations this Note does not address include: (a) Does the inclusion of "B" stakeholders in a certificate of incorporation create only contractual duties to stakeholders and fiduciary duties to the entity's stockholders?; (b) May the business judgment rule serve as a shield for all directorial decisionmaking (or directorial decisions) in a B Corporation or only those that affect purchasers of equity in the corporation?; (c) Is it likely that institutional investors in a public corporation would gain sufficient voting support to amend the certificate of incorporation in order to pursue a B certification?; and (d) May a B Corporation be formed in the face of an existing "constituency statute" that provides that directors may consider "other constituencies" in the event of a threatened change of control? Ann E. Conaway, Lessons to Be Learned: How the Policy of Freedom of Contract in Delaware's Alternative Entity Law Might Inform Delaware's General Corporation Law, 33 DEL. J. CORP. L. 789, 794 & n. 16 (2008).
18. Legal Framework, supra note 15.
19. Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173, 182 (Del. 1986).
20. More than 850, 000 businesses are incorporated in Delaware, representing more than fifty percent of all publicly traded corporations and sixty-three percent of the Fortune 500. Division of Corporations, About Agency, DEL. DEP'T OF STATE, http://www.corp.delaware.gov/aboutagency.shtml (last visited Mar. 26, 2011). While at present no publicly traded corporation has registered to become a B Corporation, the success of B Lab's mission to effect widespread social change may increase with more involvement from publicly traded corporations.
21. See Bill Gates, Chairman, Microsoft Corp., Remarks at the World Economic Forum 2008: A New Approach to Capitalism in the 21st Century (Jan. 24, 2008), available at http://www.microsoft.com/presspass/exec/billg/speeches/2008/01- 24wefdavos.mspx (suggesting that "the largest companies... should lead the way" in making a profit while serving the poor).
22. See, e.g., DEL. CODE ANN. tit. 6, § 18-1101 (c) (2005) (permitting the elimination of fiduciary duties in LLCs);
23. J. Gregory Dees, Taking Social Entrepreneurship Seriously, 44 SOCIETY 3, 24 (2007).
24. J. Gregory Dees, The Meaning of "Social Entrepreneurship" 1 (Oct. 31, 1998), available at http://www.caseatduke.org/documents/dees-sedef. pdf.
25. Connie Brock, Millions for Millions, NEW YORKER, Oct. 30, 2006, available at http://www.newyorker.com/archive/2006/10/30/061030fa-factl.
26. Introduction, GRAMEEN BANK, http://www.grameen-info.org/index. php7optioncom-content&task=view&id=16&Itemid=112 (last visited Mar. 26, 2011).
27. FAQ, GRAMEEN BANK, http://www.grameen-info.org/index.php?option=com- easyfaq&task=cat&catid=80&Itemid=200 (last visited Mar. 26, 2011).
28. Jamie Robertson, Social Entrepreneurs: Making Money for the Common Good?, BBC, Jan. 18, 2011, http://www.bbc.oo.uk/news/business-12182223 (claiming the number of social entrepreneurs today is "swelling").
29. About Us, COMMUNITY INTEREST COMPANIES, http://www.cicregulator.gov.uk/ aboutUs.shtml (last visited Mar. 26, 2011) (discussing the Companies (Audit, Investigations, and Community Enterprise) Act, 2004, c. 27, § 26).
30. David Gergen, The New Engines of Reform, U. S. NEWS & WORLD REP., Feb. 20, 2006, at 48.
31. Andrew M. Wolk, Advancing Social Entrepreneurship: Recommendations for Policy Makers and Government Agencies 2 (2008), available at http://www.rootcause.org/sites/rootcause.org/files/Advancing-Social- Entrepreneurship.pdf (quoting David Gergen).
32. John Tozzi, America's Most Promising Social Entrepreneurs, BLOOMBERG BUSINESSWEEK, June 8, 2010, http://www.bu8inessweek.com/smallbiz/running-small- bu8ine8s/archives/2010/06/americas-most-promising-social-entrepreneurs.html.
33. Clayton M. Christensen, The White House Office of Social Innovation: A New Paradigm for Solving Social Problems, HUFFINGTON POST, July 1, 2009, http://www.huffinngtonpost.com/clayton-m-christensen/the-white-house-office-on- b-223759.html.
34. See, e.g., Diana Middleton, M. BA. S Seek Social Change, WALL ST. J., Oct. 15, 2009, http://online.wsj.com/article/ SB10001424052748704107204574469602649140462.html (discussing courses at Haas School of Business (Berkeley), Said School of Business (Oxford), Tuck School of Business (Dartmouth), and Johnson School of Business (Cornell));
35. A Closer Look at Business Education: Social Entrepreneurship/Social Enterprise, ASPEN INST., (Sept. 2006), available at http://www. beyondgreypinstripes.org/pdf/sereport.pdf (noting social entrepreneurship coursework at Columbia, Duke, London Business School, Notre Dame, and Berkeley, among others). The Center for Advancement of Social Entrepreneurship ("CASE") at Duke's Fuqua School of Business is but one example of an academic center supporting the research of social entrepreneurship. Belmont University offers undergraduate majors in the field
36. see Jenny Burns, Belmont Opens Social Entrepreneur Center, NASHVILLE BUS. J., Sept. 24, 2009, http://www.bizjournals.com/nashville/stories/2009/09/21/ daily36.html (announcing the launch of Belmont's undergraduate major in social entrepreneurship), while Samford University allows students to concentrate their major in Social Entrepreneurship or to minor in the same.
37. Academics: Undergraduate Majors & Minors, SAMFORD, http://www4.samford.edu/business/academics/majors-and-minors.php (last visited Mar. 26, 2011).
38. E.g., Christina Binkley, Charity Gives Shoe Brand Extra Shine, WALL ST. J., Apr. 1, 2010, http://online.wsj.com/article/ SB10001424052702304252704575155903198032336.html (discussing the success of TOMS Shoes, a for-profit social enterprise that donates a pair of its shoes for every pair purchased);
39. (citing Allianz, Dupont, The Skoll Found. & Sustain Ability, Growing Opportunity: Entrepreneurial Solutions to Insoluble Problems 4, 15 (2007), available at http://www.sustainability.com/reasearchandadvocacy/reports-article. asp?id=937).
40. Another innovative attempt to facilitate social enterprise is the L3C, or Low-Profit, Limited Liability Corporation. In 2008, Vermont became the first state to create an L3C statute. Daniel S. Kleinberger, A Myth Deconstructed: The "Emperor's New Clothes" on the Low-Profit Limited Liability Corporation, 35 DEL. J. CORP. L. 879, 880 (2010). At present, seven other states have passed L3C legislation. Id. While there remain a number of questions about the L3C, it appears to resolve effectively some of the challenges social entrepreneurs face.
41. See Sarah Kuck, "B" Is for Beneficial: The B Corporation, WORLDCHANGING, May 22, 2008, http://www.worldchanging.com/archives/008059.html. Jay Coen Gilbert, one of B Lab's founders, said a goal of B Lab's is "to create a unified brand that makes it easy for consumers and investors to identify socially responsible businesses."
42. Thomas J. Billitteri, Mixing Mission and Business: Does Social Enterprise Need A New Legal Approach? Highlights from an Aspen Institute Roundtable, ASPEN INST. (2007), available at http://www.aspeninstitute.org/publications/mixing- mission-business-does-social-enterprise-need-new-legal-approach.
43. Community, BCORPORATION. NET, http://www.bcorporation.net/community (last visited Mar. 26, 2011). To date, no Delaware C corporation has received B Corporation certification.
44. Become a B Corporation, BCORPORATION. NET, http://www.bcorporation.net/ become (last visited Mar. 26, 2011).
45. Audits, BCORPORATION. NET, http://www.bcorporation.net/audits (last visited Mar. 26, 2011).
46. see Certification and Your Business, FAIR TRADE USA, http://transfairusa. org/certification (last visited Mar. 26, 2011).
47. The full text of the recommended charter provisions reads as follows: In discharging his or her duties, and in determining what is in the best interests of the Company and its shareholders, a Director shall consider such factors as the Director deems relevant, including, but not limited to, the long-term prospects and interests of the Company and its shareholders, and the social, economic, legal, or other effects of any action on the current and retired employees, the suppliers and customers of the Company or its subsidiaries, and the communities and society in which the Company or its subsidiaries operate, (collectively, with the shareholders, the "Stakeholders"), together with the short-term, as well as long-term, interests of its shareholders and the effect of the Company's operations (and its subsidiaries' operations) on the environment and the economy of the state, the region and the nation. Nothing in this Article express or implied, is intended to create or shall create or grant any right in or for any person or any cause of action by or for any person. Notwithstanding the foregoing, any Director is entitled to rely upon the definition of "best interests" as set forth above in enforcing his or her rights hereunder and under state law, and such reliance shall not, absent another breach, be construed as a breach of a Director's fiduciary duty of care, even in the context of a Change in Control Transaction where, as a result of weighing other Stakeholders' interests, a Director determines to accept an offer, between two competing offers, with a lower price per share. BCorporation. net, http://survey.bcorporation. net/become/legal.php (under "Corporate Structure", select "C Corporation"; then under "State of incorporation", select any of the states listed infra note 156; then click "Next") (last visited Mar. 26, 2011).
48. DEL. CODE ANN. tit. 8, § 242 (2011);
49. EDWARD P. WELCH & ANDREW J. TUREZYN, FOLK ON THE DELAWARE GENERAL CORPORATION LAW 2009: FUNDAMENTALS 599 (2009). Needless to say, the process of amending corporate governance documents varies by state.
50. DEL. CODE ANN. tit. 8, § 242.
51. DEL. CODE ANN. tit. 8, § 102 (a) - (b).
52. See Frankel v. Donovan, 120 A.2d 311, 316 (Del. Ch. 1956) ("Charter provisions which facilitate corporate action... are normally upheld by the court.").
53. *2
54. (Del. Ch. Dec. 1, 1993) ("[Section] 102 (b) (1)... authorizes companies to include in their charters any corporate governance provisions that do not violate Delaware law.").
55. ROBERT A. G. MONKS & NELL MINOW, CORPORATE GOVERNANCE 3-4 (4th ed. 2008).
56. See DEL. CODE ANN. tit. 8, § 141 (a) ("The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors-").
57. DEL. CODE ANN. tit. 8, § 102 (b) (1).
58. Anthony Bisconti, Note, The Double Bottom Line: Can Constituency Statutes Protect Socially Responsible Corporations Stuck in Revlon Land?, 42 LOY. L. A. L. REV. 765, 772 (2009).
59. FRANK H. EASTERBROOK & DANIEL R. FISCHEL, THE ECONOMIC STRUCTURE OF CORPORATE LAW 110 (1991).
60. See, e.g., Guth v. Loft, Inc., 5 A.2d 503, 510 (Del. 1939) (articulating directors' duties);
61. see also Aronson v. Lewis, 473 A.2d 805, 811 (Del. 1984) ("The existence and exercise of [directors'] power carries with it certain fundamental fiduciary obligations to the corporation and its shareholders.").
62. See CHARLES R. T. O'KELLEY & ROBERT B. THOMPSON, CORPORATIONS AND OTHER BUSINESS ASSOCIATIONS 246 (5th ed. 2006) ("The core of this fiduciary duty is the requirement that a director favor the corporation's interests over her own whenever those interests conflict.").
63. See Theodora Holding Corp. v. Henderson, 257 A.2d 398, 405 (Del. Ch. 1969) (recognizing managers' rights to contribute corporate resources to socially beneficial ends in the context of charitable donations, provided they contribute to the long-term interests of shareholders);
64. Robert A. Ragazzo, Unifying the Law of Hostile Takeovers: Bridging the Unocal/Revlon Gap, 35 ARIZ. L. REV. 989, 996 (1993) ("[T]he law has generally allowed directors to favor nonshareholder constituencies as long as the impact on shareholders is not excessive.");
65. See Katz v. Oak Indus., Inc., 508 A.2d 873, 879 (Del. Ch. 1989) ("It is the obligation for directors to attempt, within the law, to maximize the long-run interests of the corporation's stockholders....").
66. Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984).
67. *8 n. 10 (3d Cir. Nov. 15, 2005).
68. Gries Sports Enter., Inc. v. Cleveland Browns Football Co., 496 N. E.2d 959, 963-64 (Ohio 1986).
69. See Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173, 182-83 (Del. 1986).
70. (citing Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946, 955 (Del. 1985)).
71. This Note does not explore the limits of the doctrine of waste, which holds that when a director decision amounts to a waste of corporate assets, the director is not entitled to the protection of the business judgment rule. See Lewis v. Vogelstein, 699 A.2d 327, 336 (Del. Ch. 1997) (discussing standard for waste). The Delaware Supreme Court recently reiterated how high of a threshold claimants of corporate waste have to meet: "A claim of waste will arise only in the rare, 'unconscionable case where directors irrationally squander or give away corporate assets.'"
72. In re Walt Disney Co. Derivative Litig., 906 A.2d 27, 74 (Del. 2006) (citation omitted).
73. Eric Talley, On the Demise of Shareholder Primacy (Or, Murder on the James Trains Express), 75 S. CAL. L. REV. 1211, 1216 (2002).
74. This is, of course, assuming directors comply with their fiduciary duties of care and loyalty in all other respects. For comprehensive discussions about boards' duties of care and loyalty, see Smith v. Van Gorkom, 488 A.2d 858, 872-74 (Del. 1985) (delineating the contours of the duty of care)
75. and Weinberger v. UOP, Inc., 457 A.2d 701, 710-12 (Del. 1983) (discussing requirements of the duty of loyalty).
76. See, e.g., GOLDMAN SACHS GLOBAL INVESTMENT RESEARCH, GOLDMAN SACHS GRP. INC., INTRODUCING GS SUSTAIN 47, 50 (2007), http://www.unglobalcompact.org/docs/ summit2007/gs-esg-embargoed-until030707pdf.pdf (showing that socially responsible companies, and those that pay their employees well, have a competitive advantage over their peers).
77. see also Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173, 180-84 (Del. 1986) (ruling on the permissibility of each).
78. See Unocal, 493 A.2d at 954-55 (explaining the criteria directors must meet before enjoying the benefits of the business judgment rule). The reason for the higher standard of review for director decisionmaking when defending hostile takeovers is the "omnipresent specter" of entrenchment.
79. See, e.g., Cheff v. Mathes, 199 A.2d 548, 554 (Del. 1964) (discussing entrenchment and noting that "if the board has acted solely or primarily because of the desire to perpetuate themselves in office, the use of corporate funds for such purposes is improper")-
80. Unocal, 493 A.2d at 954-55.
81. (quoting Cheff, 199 A.2d at 555).
82. See Panter v. Marshall Field & Co., 646 F.2d 271, 295 (7th Cir. 1981) ('The presumption of good faith the business judgment rule affords is heightened when the majority of the board consists of independent outside directors.");
83. Aronson v. Lewis, 473 A.2d 805, 812, 815 (Del. 1984) (discussing the role of independent directors and deference in the context of demand futility);
84. Puma v. Marriott, 283 A.2d 693, 695 (Del. Ch. 1971) (applying business judgment analysis and noting distinct independence of directors).
85. Unocal, 493 A.2d at 955.
86. (citing Martin Lipton & Andrew R. Brownstein, Takeover Responses and Directors' Responsibilities: An Update, 1983 A. B. A. NATLINST. DYNAMICS CORP. CONTROL 7 (1983)).
87. 506 A.2d 173, 176 (Del. 1986).
88. See Paramount Commc'ns, Inc. v. Time Inc., 571 A.2d 1140 (Del. 1990).
89. (citing Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986)).
90. Barnali Choudhury, Serving Two Masters: Incorporating Social Responsibility into the Corporate Paradigm, 11 U. PA. J. BUS. L. 631, 657 (2009).
91. Following the drafting of this Note, the Court of Chancery of Delaware issued eBay Domestic Holdings, Inc. v. Newmark, No. 3705-CC, 2010 WL 3516473 (Del. Ch. Sept. 9, 2010), a distinguishable, but instructive, case on what constitutes a protectable corporate policy. At issue in eBay was whether the directors of Craigslist breached their fiduciary duties to eBay, a minority shareholder, by approving a rights plan that restricted eBa/s ability to purchase additional shares and to sell its shares to third parties.
92. This is, as long as directors also ensure the defensive measures they take are otherwise within the range of reasonableness. Defensive measures are within the range of reasonableness as long as they are not draconian and the cost imposed on the corporation by the defensive measure is not disproportionate to the benefit it provides. See generally Paramount Commc'ns Inc. v. QVC Network Inc., 637 A.2d 34, 49-50 (Del. 1994) (explaining that defensive measures were not reasonable because they included draconian and otherwise harmful provisions that, on balance, hurt Paramount more than they helped).
93. Id. (citing Paramount Commc'ns, Inc. v. Time Inc., 571 A.2d 1140 (Del. 1990)). In corporate law, a "white knight" refers to someone with the potential to acquire a company that the board of directors prefers for one reason or another.
94. The duty to seek the transaction with the best value reasonably available to shareholders originated from the famous case of Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986). In Revlon, the court was faced with the sale of Revlon in a bidding war between two companies seeking to take control of Revlon.
95. Leo E. Strine, Jr., The Social Responsibility of Boards of Directors and Stockholders in Charge of Control Transactions: Is There Any "There" There?, 75 S. CAL. L. REV. 1169, 1175 n. 17 (2002) ("As a general matter, the Revlon case stands for the proposition that once a board of directors either decides to tell the company or engages in change of control transaction [sic], it must act to secure the highest immediate value reasonable attainable.").
96. But see Stephen M. Bainbridge, Interpreting Nonshareholder Constituency Statutes, 19 PEPP. L. REV. 971, 983 (1992) ("[I]n [the up-for-sale] context, considering any factors other than shareholder wealth violates the board's fiduciary duties.").
97. Sterling v. Mayflower Hotel Corp., 93 A.2d 107, 118 (Del. 1952);
98. ERNEST L. FOLK, III, THE DELAWARE GENERAL CORPORATION LAW: A COMMENTARY AND ANALYSIS 10 (1972).
99. See generally Paramount Commc'ns, Inc. v. QVC Network, Inc. 637 A.2d 34, 47-48 (Del. 1994) ("There are few events that have a more significant impact on the stockholders than a sale of control or a corporate break-up. Each event represents a fundamental (and perhaps irrevocable) change in the nature of the corporate enterprise from a practical standpoint. It is the significance of each of these events that justifies: (a) focusing on the directors' obligation to seek the best value reasonably available to the stockholders; and (b) requiring a close scrutiny of board action which could be contrary to the stockholders' interests.").
100. See Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173, 182 (Del. 1986) (requiring directors to stop protecting the "corporate bastion").
101. See Lawrence Scheinert, Countering the Stoneridge Critics: The Prudence of Maintaining the Status Quo for Lawyer Liability Under Rule 10B-5, 11 FLA. COASTAL L. REV. 1, 24 (2009) ("The corollary inquires into what the bargaining parties would have wanted had they been able to freely negotiate without transaction costs. This question yields the Pareto efficient outcome by approximating what the parties would have bargained for."). The Pareto method approximates what parties would have bargained for in order to achieve the most wealth for both parties.
102. A fundamental assumption of economists' models of the corporate and capital markets is that shareholders are interested in maximizing wealth and avoiding risk. Indeed, this is the basic premise of Market Portfolio Theory, the historically dominant investment theory. Legal scholars such as Stephen Bainbridge claim that maximization of profit promotes the best interests of shareholders because the more wealth that is created, the better it is for everyone. For more background on this topic, see EASTERBROOK AND FLSCHEL, supra note 85, at 43.
103. Ian B. Lee, Corporate Law, Profit Maximization, and the 'Responsible Shareholder, 10 STAN. J. L. BUS. & FIN. 31, 53 n. 189 (2005)
104. (citing Cynthia A. Williams, The Securities and Exchange Commission and Corporate Social Transparency, 112 HARV. L. REV. 1197, 1268 (1999)). Ethical funds refer to funds under professional management that use social "screens" to avoid products that were not produced in a socially responsible manner and/or to encourage socially responsible practices.
105. Williams, supra, 112 HARV. L. REV. at 1268.
106. See, e.g., Paramount Commc'ns Inc. v. QVC Network Inc., 637 A.2d 34, 36 (Del. 1994) ("QVC and certain stockholders of Paramount commenced separate actions... against Paramount.");
107. Paramount Commc'ns, Inc. v. Time Inc., 571 A.2d 1140, 1142 (Del. 1990) (explaining that shareholder plaintiffs argued that Time's board failed to maximize shareholder value);
108. Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986).
109. Jed Emerson, The Blended Value Proposition: Integrating Social and Financial Returns, 45 CAL. MGMT. REV. 35, 38 (2003).
110. Elizabeth Wine, SRI Plows the Path to Profitability, ON WALL ST., Aug. 1, 2009, at 28, available at http://www.onwa-street.com/ows-issues/2009-8/sri- plows-the-path-toprofitability-2663476-l.html.
111. For example, the SEC recently made amendments to bring securities law in line with the "realities of the modern marketplace." Revisions of Limited Offering Exemptions in Regulation D, Securities Act Release No. 8828, 72 Fed. Reg. 45, 116, 45, 117 (proposed Aug. 10, 2007).
112. Revlon, Inc. v. MacAndrews & Forbes Holdings, 506 A.2d 173, 1150 (Del. 1985) ("[T]he question of 'long-term' versus 'short-term' values is largely irrelevant because directors, generally, are obliged to chart a course for a corporation which is in its best interests without regard to a fixed investment horizon. ").
113. See Marjorie Kelly, Not Just For Profit, 54 STRATEGY & BUS. 1, 4 (2009), available at http://www.bcorporation.net/resources/bcorp/documents/ strategy+business.pdf ("The financial meltdown of 2008 was a direct result of the pursuit of immediate profit by investment bankers and mortgage brokers who disregarded the impact of their actions on customers, on the larger economy, and indeed on stockholders and the company itself in the long term.").
114. MODEL BUS. CORP. ACT ANN. 8-209 (2008) (noting that Arizona, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Wisconsin, and Wyoming have constituency statutes).
115. Maryland was the first state to pass benefit corporation legislation, doing so on April 13, 2010. MD. CODE. ANN., CORPS. & ASS'NS § 5-6C (West 2010).
116. Vermont followed by passing legislation on May 19, 2010. VT. STAT. ANN. tit. 11, § 21 (2010).
117. Virginia and New Jersey passed similar legislation in early 2011. Public Policy, BCORPORATION. NET, http://www.bcorporation.net/publicpolicy (last visited Apr. 25, 2011). Other states that are currently considering benefit legislation include California, Colorado, Delaware, Pennsylvania, Maine, North Carolina, New York, and Oregon. Fiscal and Policy Note (Revised), S. B. 690, 2010 Gen. Assemb., Reg. Sess. (Md. 2010), available at http://mlis.state.md.us/ 2010rs/fnotes/biL0000/sb0690.pdf. In New York, the Senate has approved a draft version.
118. MD. CODE ANN., CORPS. & ASS'NS, § 5-6C-0l (C);
119. N. J. STAT. ANN. § l4A5 (a);
120. VA. CODE ANN. § 13.1-787 (A);
121. VT. STAT. ANN. tit. 11A, § 21. 08 (a).
122. MD. CODE ANN., CORPS. & ASS'NS, § 5-6C-0l (C);
123. N. J. STAT. ANN. § 14A:1;
124. VA. CODE ANN. § 13.1-782;
125. VT. STAT. ANN. tit. 11A, § 21.03 (a) (4).
126. MD. CODE ANN., CORPS. & ASS'NS, § 5-6C-01 (C);
127. N. J. STAT. ANN. § 14A:11 (a) (2);
128. VA. CODE ANN. § 13. 1-791 (A) (2);
129. VT. STAT. ANN. tit. 11A, § 21.03 (a) (4).
130. E.g., VT. STAT. ANN. TIT. HA, § 21. 08 (c).
131. See Public Policy, BCORPORATION. NET, http://www.bcorporation.net/ publicpolicy (last visited Apr. 25, 2011) (discussing and linking to model legislation created by an attorney for B Lab).
132. For more information about benefit corporation legislation, see Elizabeth Hang, Steven Haymore, Dirk Sampselle & Larry Vranka, The Need and Rationale for the 'Benefit Corporation': Why it is the Right Legal Solution for Using the Power of Business to Solve Social Problems (Apr. 1, 2011) (unpublished white paper) (on file with author).
133. In 2007, the SEC proposed revisions to the rules applicable to private and limited offerings. Revisions of Limited Offering Exemptions in Regulation D, Securities Act Release No. 8828, 72 Fed. Reg. 45, 116 (proposed Aug. 10, 2007). The Commission's objective was to clarify and modernize the rules to "bring them into line with the realities of modern market practice and communication technologies without compromising investor protection. "
134. See, e.g., Joseph L. Weiner, The Berle-Dodd Dialogue on the Concept of the Corporation, 64 COLUM. L. REV. 1458 (1964) (summarizing the entirety of the seminal corporate purpose debate between Adolph E. Berle and E. Merrick Dodd).