Will Vermont be the first to pass a new law for not only for profits?

A few months ago,  I wrote about attempts to pass state legislation creating a new corporate form aimed at avoiding the Ben & Jerry’s trap. That is, not only for profits that go public or get sold and, as a result, find their social missions become diluted or compromised by the new owners.

Now, it’s looks like these attempts have real traction.  And, in a matter of weeks, Vermont might become the first state to pass such a law.

There actually are two flavors of such legislation throughout the country.  The Vermont style would create a corporate form for “for-benefit” corporations,  in which companies have to consider the effects of any action on shareholders, employees, suppliers, and customers, as well as “the economy of the state, region and nation, community and societal considerations” and “the local and global environment.”   It’s part of an ambitious effort spearheaded by B Lab, the Berwyn, Pa., nonprofit that certifies triple-bottom-line companies, to pass laws  creating for-benefit companies. (That’s the organization that also recently was behind a move in Philadelphia to pass tax incentives for investing in not only for profits).  Other states considering such a law include Maryland, New York, Pennsylvania, North Carolina, Colorado, and Oregon.

The other flavor of legislation is being developed in California, where a group of lawyers and companies have produced different model legislation. It would also create a new corporate form, but would leave out the part about having to consider the interests of all the parties mentioned in the Vermont bill.  The group has been working on this for a while. It previously introduced a very different version of the  legislation that would make California a “constituency state”, under which companies can take into consideration interests other than shareholders.  Gov. Schwarznegger sent it back, asking for changes creating a new form of incorporation.

For those in the not only for profit world, it will be a big deal if Vermont passes this bill.