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The Corporate Contract in Changing TimesIs the Law Keeping Up?$
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Steven Davidoff Solomon and Randall Stuart Thomas

Print publication date: 2019

Print ISBN-13: 9780226599403

Published to Chicago Scholarship Online: September 2019

DOI: 10.7208/chicago/9780226599540.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 25 June 2022

The Odd Couple

The Odd Couple

Delaware and Public Benefit Corporations

(p.88) Chapter Four The Odd Couple
The Corporate Contract in Changing Times

Michael B. Dorff

University of Chicago Press

Public Benefit Corporations (“PBCs”) are a revolutionary new form of business organization that overturn the fundamental corporate principle of shareholder wealth maximization. Of the many questions that surround this new entity type, perhaps the most perplexing is why Delaware – the most influential and important state for corporate law by far – chose to adopt it. I explore this troubling question through qualitative empirical research. I find that Delaware primarily wanted to serve the needs of social entrepreneurs and financiers, but also hoped to harness the power of capitalism to remedy social ills that government has so far failed to fix. The PBC statute rather poorly implements either of these goals. The PBC statute is not a very good enforcement tool. On the other hand, the statute may prove an effective reinforcement tool, aiding sincere social entrepreneurs to pursue their various missions. Also, private ordering, such as certification by outside entities like B Lab, may fill many of the important gaps left by the law.

Keywords:   Social Enterprise, Social Entrepreneurship, Benefit Corporation, Public Benefit Corporation, Corporate Governance, Entrepreneur, Entrepreneurship

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