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It's great that RStudio is changing to a PBC. However from what I've read, being a Benefit Corporation doesn't actually mean anything. - From my reading it's p

It's great that RStudio is changing to a PBC. However from what I've read, being a Benefit Corporation doesn't actually mean anything. - From my reading it's possible for a Benefit Corporation to still be taken over or bought out. - Benefit Corporations can convert back to regular corporations (in contrast with most 501(c)3's which cannot convert to corporations except under very particular circumstances) - Unlike a 501(c)3, the charter of a Benefit Corporation is not legally binding It's not to say that being a Benefit Corporation is bad (or good), but rather to say that it's kind of meaningless. I believe people should judge a for profit company, which a Benefit Corporation is, by its leadership, not necessarily by its legal designation. Fortunately the leadership at RStudio have made themselves trustworthy, at least by the fact that they're relatively transparent and most of their stuff is open source. I'd be curious to know why they just didn't become a non-profit. I assume the main reason is because they want to be able to raise capital more easily. Source: https://corpgov.law.harvard.edu/2012/05/13/benefit-corporations-vs-regular-corporations-a-harmful-dichotomy https://corpgov.law.harvard.edu/2012/05/13/benefit-corporati...

scottmmjackson 7y ago
Disclaimer: I'm an RStudio employee. But this post is my personal opinion and not representative of that of RStudio. Separately, I'm also a licensed (non-practicing) attorney; despite that, this isn't legal advice. Some of the things you've said are correct, but are kind of skipping a few important steps. Buyout: Any corporate buyout, particularly of a Delaware corporation, opens the board up to scrutiny and requires the consent of the corporate constituency. In JJ's presentation he cited Revlon which is an example of a dispute over a buyout by a major shareholder. So, yes, technically benefit corporations can be bought out, but they must approve of the buyout using the corporate governance rules of a benefit corporation. Converting to a benefit corporation isn't easy- you pretty much require unanimous shareholder consent and it's fairly close to the amount of consensus you need to convert to a pure nonprofit. Same with converting back to an "any lawful business purpose" corporation. So again, yes it's possible, but it's very unlikely unless something convinces basically everyone with a stake that it's worthwhile. I'm not sure where you're getting that PBC status is not legally binding- I didn't see anything like that in the Harvard link. Corporate purpose statements have a very real legal effect. Would you mind explaining more about this statement? I want to make sure I'm not mistaken. Note that the article you cite was written a year before the Delaware Benefit Corporation Law was signed by the governor- so some of the things it says might be a little speculative based on the legal realities at the time. If you want to learn more in depth, I can recommend "Benefit Corporation Law & Governance" by Frederick Alexander.
- nathancahill 7y ago
  Thanks for the thoughtful comment. It's an area I have been very interested in. Will look at that book.
Deimorz 7y ago
As a specific example, Etsy recently (2017) converted back into a normal corporation from a B Corp: https://qz.com/work/1146365/etsy-made-mistakes-from-which-other-b-corps-can-learn/ https://qz.com/work/1146365/etsy-made-mistakes-from-which-ot...
- drozycki 7y ago
  I am not an expert, but it appears there are two different "types" of "B corp". One has a standard corporate charter but is certified annually by a nonprofit called B Lab. The second has a special charter which frees its leadership from liability if they make a decision for social impact that has a negative impact on shareholder value. Etsy was the first type but they let their annual certification lapse, while RStudio is becoming the second type. https://en.wikipedia.org/wiki/B_Corporation_(certification) https://en.wikipedia.org/wiki/B_Corporation_(certification) https://en.wikipedia.org/wiki/Benefit_corporation https://en.wikipedia.org/wiki/Benefit_corporation

scottmmjackson 7y ago

Disclaimer: I'm an RStudio employee. But this post is my personal opinion and not representative of that of RStudio. Separately, I'm also a licensed (non-practicing) attorney; despite that, this isn't legal advice. Some of the things you've said are correct, but are kind of skipping a few important steps. Buyout: Any corporate buyout, particularly of a Delaware corporation, opens the board up to scrutiny and requires the consent of the corporate constituency. In JJ's presentation he cited Revlon which is an example of a dispute over a buyout by a major shareholder. So, yes, technically benefit corporations can be bought out, but they must approve of the buyout using the corporate governance rules of a benefit corporation. Converting to a benefit corporation isn't easy- you pretty much require unanimous shareholder consent and it's fairly close to the amount of consensus you need to convert to a pure nonprofit. Same with converting back to an "any lawful business purpose" corporation. So again, yes it's possible, but it's very unlikely unless something convinces basically everyone with a stake that it's worthwhile. I'm not sure where you're getting that PBC status is not legally binding- I didn't see anything like that in the Harvard link. Corporate purpose statements have a very real legal effect. Would you mind explaining more about this statement? I want to make sure I'm not mistaken. Note that the article you cite was written a year before the Delaware Benefit Corporation Law was signed by the governor- so some of the things it says might be a little speculative based on the legal realities at the time. If you want to learn more in depth, I can recommend "Benefit Corporation Law & Governance" by Frederick Alexander.

nathancahill 7y ago
Thanks for the thoughtful comment. It's an area I have been very interested in. Will look at that book.

Deimorz 7y ago

As a specific example, Etsy recently (2017) converted back into a normal corporation from a B Corp: https://qz.com/work/1146365/etsy-made-mistakes-from-which-other-b-corps-can-learn/ https://qz.com/work/1146365/etsy-made-mistakes-from-which-ot...

drozycki 7y ago
I am not an expert, but it appears there are two different "types" of "B corp". One has a standard corporate charter but is certified annually by a nonprofit called B Lab. The second has a special charter which frees its leadership from liability if they make a decision for social impact that has a negative impact on shareholder value. Etsy was the first type but they let their annual certification lapse, while RStudio is becoming the second type. https://en.wikipedia.org/wiki/B_Corporation_(certification) https://en.wikipedia.org/wiki/B_Corporation_(certification) https://en.wikipedia.org/wiki/Benefit_corporation https://en.wikipedia.org/wiki/Benefit_corporation