Benefit Corporations: Expansion of the Public-Private Fascist State, Part 1

By Stephen Poole
Posted on Freedom Advocates on August 12th 2011

This four-part series was written in April and May of 2011 to inform North Carolina residents about Senate Bill 26, known as the “North Carolina Benefit Corporation Act,” so they might voice their opposition to what is essentially a stealth implementation of many Agenda 21 principles. It was originally published at North Carolina Freedom (

Although the legislation appears to have died in committee, it is important that activists across the country become fully aware of the “benefit corporations” strategy because the sponsoring nonprofit B Labs Corporation is introducing the same boilerplate legislation in all 50 states. Indeed, such legislation has already been passed in Maryland, Vermont, New Jersey (home of “conservative” and global-warming believer Chris Christie), Virginia, and Hawaii. And the same tactics that were used successfully in those states will be employed elsewhere, beginning with glowing news stories about how these new corporations will be all about creating societal benefits rather than raking in cash — which the following articles will prove is an outright lie.

As is so often the case when federal or state legislative bodies are in session, the 2010-2011 NC General Assembly has set about promulgating new decrees at a breakneck pace. To be fair, some of the proposed laws aim to repeal or push back the oppressive and soviet-style measures taken by earlier assemblages. But even putative Republican conservatives seem to joining in the push for more regime control over private enterprise at a time when their primary goal should be repealing current tyrannical legislation. Case in point: Senate Bill 26, known as the “North Carolina Benefit Corporation Act,” sponsored and/or co-sponsored by two Democrats and two “Republicans.” Although it’s currently in committee and might not make it to the floor for a vote, its mere presence is a dire warning for what we can expect in future proposals to dictate our business affairs and our personal lives.

As with most legislation, SB 26 is a confusing mess…but quite profitable if you’re in on the game. I beg your patience as I take time to explain this bill’s meaning and its ultimate implications. By necessity, this will be a multi-part post. [Note: all bolds  are mine — I just want to make sure you see the intentional deception at work.]

SB 26 would create a new type of corporation called a “benefit corporation” (BC). The bill reads:

“A domestic corporation, including a domestic corporation incorporated upon a conversion effected pursuant to Part 1 of Article 11A of this Chapter, may be incorporated as a benefit corporation by including in its initial articles of incorporation a provision providing that the corporation shall be a benefit corporation governed by this Article. The articles of incorporation must also include an identification of any specific public benefit purpose or purposes as required by G.S. 55 18 30 and must include all provisions required by, and may include any provision permitted by, G.S. 55 2 02.”

Before we break down the details of the bill, let’s take a look at how the “press” is describing it. In a March 3, 2011 blog post on the Raleigh News & Observer Web site, John Murawski gushes:

“Advocates of socially responsible capitalism are hoping North Carolina becomes one of the few states in the nation that gives businesses legal permission to fulfill moral obligations — to the poor or to the environment — at the expense of their own shareholders.…Legislation recently introduced in the N.C. General Assembly could get its first vote as early as Tuesday in a Senate judiciary committee. The bill would allow a business to turn idealistic mission statements into legally enforceable documents by diverting company profits to humanitarian goals.

A more honest appraisal regarding a BC’s profits can be found in the online version of the Durham Herald-Sun in a piece of fluff/stenography called “Proposed law for ‘good’ business” written by a bankruptcy lawyer (at least they used quotes around “good”).

“A proposed state law, S26, which would enact the North Carolina Benefit Corporation act, is just the experiment and will test whether businesses can be diverted from striving towards the profit motive as their sole goal.

That’s a nice bit of wordsmithing right there — because the apparatchik was clever enough to put in the adjective “sole” in front of “goal.” As we read more about SB 26 in this piece of agitprop, pay attention to the bolded words:

“…the benefit corporation legislation does not require social goals to outweigh a profit motive. Rather, it requires that the benefit corporation make a material positive impact on society and the environment as measured by a third-party standard….

In other words, if you don’t have the shareholder’s pecuniary interest as your overriding goal as a corporate director or officer, you open yourself to lawsuits. This proposed legislation opens the door to relaxing the requirement.”

The author, Jeremy Todd Browner, deserves credit for admitting that the bill “does not require social goals to outweigh a profit motive.” As far as relaxing the corporation’s requirements to shareholders, I think it’s in this section:

Section 55-18-40.  Standard of conduct for directors.
(a)        In discharging their duties as directors of a benefit corporation, directors shall consider the effects of any action or decision not to act upon the following:

(1)        The shareholders of the benefit corporation.
(2)        The employees and workforce of the benefit corporation, its subsidiaries, and suppliers” (there are several other items listed, but you get the idea).

So there is no mandate that profits must be sacrificed, only a provision that they may be sacrificed. With that falsehood exposed, let’s see what the proposed law really says.

A corporation can now start up or transition to a “benefit corporation,” and they must identify “any specific public benefit purpose or purposes.”

Let’s read the definition of “corporate purposes,” which is the way a corporation qualifies for BC status:

Section 55 18 30. Corporate purposes.

(a) A benefit corporation shall have as one of its corporate purposes the creation of a general public benefit. A benefit corporation may include in its articles of incorporation other corporate purposes, including the purpose of engaging in any lawful business.
(b) A benefit corporation may include as a corporate purpose in its articles of incorporation one or more specific public benefit purposes in addition to its purposes under subsection (a) of this section.”

A little more of the maze revealed. So the BC must have “the creation of a general public benefit” as one of its “corporate purposes,” but it has the option of other corporate purposes — some that do create public benefits, others that don’t so long as they involve a lawful business practice. It also has the option of including a “specific public benefit purpose.”

Not much help, I know. So let’s try to discern what these phrases really mean.

“General Public Benefit” is defined as “a material positive impact on society and the environment, taken as a whole, as measured by a third party standard, from the business and operations of a benefit corporation.” The “specific public benefit purposes” include but are not limited to (gotta love that “not limited to” loophole!)

  • Providing low-income or underserved individuals or communities with beneficial products or services.
  • Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business.
  • Preserving or improving the environment.
  • Improving human health.
  • Promoting the arts, sciences, or advancement of knowledge.
  • Increasing the flow of capital to entities with a public benefit purpose.

Three takeaways here, all very important. First, almost any business activity would qualify as having a “material positive impact on society.” You could make the case that a whorehouse has a “material positive impact on society” in that it creates high-paying jobs and facilitates the creation of other employment opportunities and business creation such as hotels near to and limousine services to and from said brothel. On a more serious note, couldn’t any business that ended up hiring unemployed people claim that it had made a “material positive impact on society?” Of course it could — but note that the wording is “society and the environment, taken as whole.” That’s the sticky wicket. It’s also what makes this bill more about “sustainable development” and the implementation of Agenda 21 than might seem apparent at first blush.

Ergo, the second point: Who decides if a business meets this forked-tongue qualification? The text doesn’t say: It merely refers to a “third-party standard.” Who sets and administers that standard through business audits?

Lastly, a company that cobbles together a “general public benefit” can then add as a “specific public benefit” the financing of other BCs.

In Part 2, we’ll examine why that codicil opens up a whole can of crony-capitalism schemes and take a look at who’s really behind this bill, what they stand to gain from it, and why it could be very bad for you and me.

Here are the links to Part 2, Part 3, Part 4.

As a graduate of Wake Forest University, Stephen Poole emerged from that institution as a zombified collectivist incapable of critically analyzing the socialist shibboleths with which he’d been indoctrinated. After awakening to the untenable nature of his “beliefs,” he’s now an individualist who believes in truly free markets, Constitutionally limited federal government, the eminence of personal liberty, and unalienable rights granted by God.

Discover more information on the steps you can take in opposition to Benefit Corporation legislation in your state. See Wynne Coleman’s article, B Lab’s Benefit Corporations Won’t Benefit You.

“Benefit Corporations: Expansion of the Public-Private Fascist State, Part 1” by Stephen Poole


This article contains links to outside sources not controlled by Freedom Advocates and therefore are subject to change.

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