Companies that want to organize or reorganize under a new corporate structure that lets them make social causes part of their mission can begin filing paperwork at the Indiana Secretary of State’s office.
A law creating the new “benefit corporation” designation takes effect Jan. 1.
The change will make it possible for firms to write priorities besides profit—such as philanthropy, environmental concerns or workplace wellness—directly into their bylaws.
“Traditional corporate law has required directors to place profits above all else,” Secretary of State Connie Lawson said in a prepared statement. “Allowing businesses to register with my office as a benefit corporation will allow them to incorporate their social mission into the core of their business.”
Benefit corporations are similar to traditional, for-profit corporate structures, except that they expand the obligation of the boards that oversee them. Board members must consider social and community factors—in addition to the financial interest of shareholders—when making decisions.
State Rep. Casey Cox, R-Fort Wayne, authored the legislation that created the new designation.
“Over the past two years, I’ve had numerous discussions with business owners about providing tools to allow businesses to better emphasize social responsibility alongside profit,” Cox said in a statement. “This legislation is a great step toward retaining and attracting creative entrepreneurs and job creators to Indiana.”
The designation is open to new business owners, as well as existing corporations that would like to change their organizational structure.
Indiana is among 31 states that have passed laws creating in benefit corporations, according to B Lab, a not-for-profit organization that urges companies to get involved in social movements.