Social Purpose Corporations and Benefit Corporations may be Formed in Florida

On June 20, 2014, the Florida Governor approved a new law to allow the formation in Florida of social purpose corporations and benefit corporations. These organizations fall between for-profit corporations and nonprofit corporations by allowing the boards of directors to consider public benefit goals in addition to making profits.

There are occasions when real estate developers and business owners may want their entities to own real estate that not only serves a public good but also makes a profit for its shareholders, so these entities could provide dividends to shareholders as well as accomplishing a public good, something that the pure nonprofit corporation and pure business corporation cannot do.

Beginning July 1, 2014, individuals and organizations may form Florida social purpose corporations that have specified social purposes and may form Florida benefit corporations that are created for general public benefits as determined by management.

Unlike Florida nonprofit corporations that are not allowed to be organized for a pecuniary profit, these new types of entities may include profit as a purpose.

Unlike Florida for-profit corporations, the boards of directors of these new entities may consider public benefit in addition to or as a priority over making profits.

The boards of directors of benefit corporations may select to consider such things as providing products or services to low-income or underserved individuals or communities, promoting economic opportunity beyond creation of jobs, protecting or restoring the environment, improving human health, and promoting the arts and science.

The boards of directors of social purpose corporations may consider special public benefits as well as such things as its employees and work force, its suppliers, its customers, community and societal factors, and the local and global environment,

House Bill 685 CS, Laws of Florida Chapter 2014-209, effective July 1, 2014, amending Florida Statutes Chapter 607.