When our clients' goals outgrew traditional corporate law, a Wendel Rosen partner wrote and championed legislation to create a new class of corporation for values-driven companies.
Traditional corporate law requires that profits take precedence. Companies with a social mission risk running afoul of their legal obligations to shareholders. However, investors and customers today expect true corporate social responsibility, making the desire to do good a practical imperative. Wendel Rosen’s client, a well-known outdoor clothing and gear manufacturer, was on the leading edge of this movement. When the confines of traditional corporate law threatened to make its socially responsible business model unsustainable, Wendel Rosen set out to “innovate the law” and create a new class of corporation.
The Wendel Edge
A Wendel Rosen partner co-drafted Assembly Bill 361 (AB 361) to create “benefit corporations,” a new corporate form that allows companies to prioritize social and environmental goals. The partner also co-chaired the legal advisory group shaping the law and spearheaded efforts to secure its passage.
AB 361 became California law in October 2012. The law requires companies organized as Benefit Corporations to consider the environmental and social impacts of their business in a transparent way while providing the company’s officers and directors the discretion and legal protection to prioritize those considerations ahead of short-term profits. Following the law’s passage, Wendel Rosen converted its client to a Benefit Corporation – the first in California. Since then, we have assisted dozens more in the formation or conversion to this corporate form.