On January 1st of this year, the state of Illinois passed the “Benefit Corporation Act.” The benefits of becoming a Benefit Corporation are that it identifies your business as a socially responsible entity. However, to become one, in Illinois, certain requirements have to be met, some of which are summarized below.

The Illinois Business Corporation Act, which is applicable to Illinois for-profit corporations incorporated in that state, is still applicable to “Benefit Corporations” and such entities are subject to the duties, restrictions and liabilities of corporations incorporated under that Act and enjoy the powers and privileges afforded by that Act except to the extent that the “Benefit Corporation Act” takes precedence. A “Benefit Corporation” is an Illinois corporation that contains a statement to that effect in its articles of incorporation. A “Benefit Corporation” may terminate its status as such and cease to be subject to the “Benefit Corporation Act” by amending its articles of incorporation to remove the statement that the corporation is a “Benefit Corporation.”

A “Benefit Corporation” shall have a purpose of creating general public benefit. In addition, it may identify one or more specific public benefits in its Articles of Incorporation. A “General Public Benefit” is defined in the statute as “material positive impact on society and the environment, taken as a whole, assessed against a third-party standard, from the business and operations of a “Benefit Corporation.” A “Specific Public Benefit” means (1) providing low-income or underserved individuals or communities with beneficial products or services; (2) promoting economic opportunity for individuals or communities beyond the creation of jobs in the ordinary course of business; (3) preserving the environment; (4) improving human health; (5) promoting the arts, sciences or advancement of knowledge; (6) increasing the flow of capital to entities with a public benefit purpose; or (7) the accomplishment of any other particular benefit for society or the environment.

In discharging the duties of their positions, the Board of Directors, committees of the Board and the individual directors of a “Benefit Corporation”, in considering the best interests of that entity, shall consider the effects of any action taken by that entity on its shareholders, employees and work force as well as the employees and work force of its suppliers, the interests of its customers, community and societal considerations, including those of each community in which it has facilities or where its suppliers are located, the local and global environment, the short-term and long-term interests of the corporation and the ability of that corporation to accomplish its general public benefit purpose and any specific public benefit purpose.

In addition, its Board shall include a director who is designated as the benefit director, who in addition to the duties and rights that he or she would ordinarily have as a corporate director, shall prepare in the annual benefit report to the shareholders an opinion on whether the “Benefit Corporation” acted in accordance with its public benefit purposes over the previous year and whether the directors and officers acted in accordance with their duties set forth in the Act, including those set forth in the previous paragraph. In addition, each officer of the corporation shall consider the factors set forth in the previous paragraph if he has discretion to act with respect to that matter and it reasonably appears that the matter may have a material effect on either the general public interest or one of the specific public interests set forth above. Also, an officer may be designated as the benefit officer who shall have powers and duties relating to the purpose of the “Benefit Corporation” to create general public benefit or any of the specific public benefit purposes set forth in the above paragraph. He or she may also have the duty to prepare the annual benefit report. That report shall, among other things, set forth the ways in which the “Benefit Corporation” pursued general public benefit during the past year and the extent to which the general public benefit was created, the ways in which the “Benefit Corporation” pursued any specific public benefits set forth in its Articles of Incorporation which are part of its purpose to create, include an assessment of the overall social and environmental performance of the “Benefit Corporation” against a third-party standard, include the name of the benefit director and the benefit officer, if any, and an address to which correspondence to each of them may be directed, and it shall be sent annually to each shareholder and be posted on the public portion of its website, except that compensation,, financial and proprietary information may be omitted from that posting.


The material on this website is for informational purposes only. It should not be considered legal advice and is not intended to create an attorney-client relationship. If you have questions regarding any material presented herein, we recommend that you consult an attorney. This web site and information presented herein were designed in accordance with Illinois law. Any content in conflict with the laws or ethical code of attorney conduct of any other jurisdiction is unintentional and void. I am a Chicago attorney practicing in the areas of trademark, copyright and information technology law as well as general corporate law. Formerly a trademark examining attorney with the United States Patent and Trademark Office, I have been in private practice since 1987 representing clients in a wide variety of industries, including the consumer products, financial services, information technology and entertainment industries. You can contact me at, by phone at 773.934.5855 or by mail at 417 S. Jefferson St., #304, Chicago, IL 60607 USA
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