Benefit Corporation Governance in the UK


What is the difference between B Corporation and Benefit Corporation?

B Corp is a certification. Benefit Corporation is a legal form in the US, Italy and Colombia.


Why doesn't Benefit Corporation legislation exist in the UK?

In the UK, the Companies Act (2006) is more flexible, enabling businesses to operate for the wider purpose of all stakeholders - although it is not enforcing these considerations.  It is therefore possible within the UK Companies Act for B Corps to meet the legal requirement by amending their Articles of Association to embed the commitment to treat all stakeholders' interests equally. The effect is identical to that of the US legal requirement laid out in the Benefit Corporation legislation. B Lab UK created a Policy Council chaired by B Corp Bates Wells Braithwaite which has established this UK Legal Requirement. For details on the legal requirement that UK B Corps have to meet (by including these into their Company Articles) please see here.


Are there plans to introduce Benefit Corporation legislation in the UK?

We are working on it…

B Lab UK is working with the UK Government to create a set of model articles that makes it frictionless for entrepreneurs and corporates to adopt the B Corp legal requirement. B Lab UK seeks to build on the recommendation of the Government’s Mission Led Business Review which was for Government to explore the creation of a Benefit company legal form. Currently, this is work in progress.


Why has the Benefit Corporation legislation been passed in states across the USA?

In the US, company law operates at a state level, and for-profit company law tends to be inflexible, forcing directors to maximise shareholder value irrespective of any other consideration. Therefore, B Lab has campaigned to pass laws to create a new legal company form called Benefit Corporation legislation. This changes the purpose of the company so that it operates not just for shareholders, but also for workers, the community and the environment, ranking them alongside shareholders, and not subordinate to them. This law has now been passed in 34 US states, Italy, Colombia and is under consideration in several other countries, including Argentina and Australia.  

All Certified B Corps in the US must, if possible, adopt a corporate governance structure that requires accountability to all stakeholders, and not just shareholders. Under the US system, some companies (such as limited liability companies) may be able to do this with a simple change to their operating documents. But for other US entities (such as corporations formed in Delaware and certain other states), the only way to adopt stakeholder governance is to convert to a Benefit Corporation, and for those companies, certification does require conversion to a Benefit Corporation.

In addition to the B Corps that have converted in order to achieve certification, thousands of US businesses that are not certified have chosen to use the benefit corporation structure in order to create a stakeholder-centric governance structure.