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Very Significantly Different ! - The Public Benefit Corporation and the Benefit Corporation.

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Over the years that I have been researching the Maine economic development policies that you find documented here in this blog, I have upon numerous occasions come across the state and the Governor justifying the polices on the basis that they are forced to implement them because other states are doing so. However my still limited investigation into the policies instituted in other states is not finding that to be so. It is true that all states that I have researched have economic development policies and tax incentives, but not all states have chartered state corporations that dole out tax credits to corporations. Incentives are most often in the form of tax exemptions rather than tax credits, the difference being that, as tax credits work in Maine, they are largely refundable tax credits and as impacted by other statutes and policies that have been implemented over the years, that translates as direct redistribution of wealth from the general taxpayers pockets to corporate bank accounts.

When the Governor or other overlord brags that companies are attracted to the Pine Tree Zone Tax Incentives- that is an understatement since all of the economic policies including tax exemptions, "tax credits" and generous charitable gifts, are designed to work like cogs in a machine, mutually amplifying one another. Companies are attracted by these corporate welfare programs in the same way that some people are attracted by the general welfare programs whose growth is tangential to the former.

I recently came across the Wikipedia Page on Benefit Corporations. I became aware of Benefit Corporations because New Hampshire also recently passed such a bill. Maine has not passed such a bill despite the fact that it is a popular trend among the states as the long list of states that have passed a Benefit Corporation bill found on the Wikipedia Page demonstrates. I am using the text from the Oregon bill passed in 2013 to show why passing a Benefit corporation bill would be a conflict of interest with Maine's economic development policies, which have been passed on the basis that they serve the public's interest:

State of Oregon HB2296
 Relating to benefit companies. Whereas the Legislative Assembly intends with this 2013 Act to provide the legal means to create and operate benefit companies, a form of business entity the purpose of which is to create benefits for the public in addition to generating profit for the entity’s owners; and Whereas the Legislative Assembly understands and intends that the provisions of this 2013 Act do not give a benefit company a preference for public contracts, provide a benefit company with any tax advantage or otherwise permit the State of Oregon, an agency of the State of Oregon, a local government or an agency of a local government to grant a preference or advantage to a benefit company that is not available on the same basis to any other person or entity, or that is solely a consequence of the benefit company’s status as a benefit company; now, therefore,  (emphasis mine)

“Companies in Oregon should not be forced to maximize shareholder profits at the expense of the public good,” said Rep. Shemia Fagan, D-Multnomah/Clackamas counties, who is a business attorney. “It is a sign of great progress that Oregon companies want the flexibility to care about more than just dollar signs.” oregon's blog

Wikipedia pages on Benefit Corporations are Public-benefit corporation and Benefit corporation

You will find Maine listed on the former and not the latter because the definition and description of  what the term "benefit corporation" means differs between the two pages.

On the Public-benefit corporation page it sates the following:
Public-benefit corporations have, in the USA, historically been public corporations chartered by a state designed to perform some public benefit. Several states have signed into law, new types of public benefit corporations and benefit corporations that allow for public benefit to be a charter purpose in addition to the traditional corporate goal of maximizing profit for shareholders.[1] [2] In other countries, they are known as crown corporation, statutory corporationgovernment owned corporation having monopoly over a specific service or market........
Public-benefit corporations likely have their direct roots in mercantile capitalism. In the early days of European exploration and colonization, a government or monarch would sometimes grant a charter to an entity defining a legal body ("corporation") and make potentially risky investments. While certainly not public-benefit corporations by today's standards, entities such as the Massachusetts Bay CompanyHudson's Bay Company, and the Dutch East India Company arguably are examples prototypes of publicly chartered (in this case, crown-chartered) corporations successfully undertaking defined activities with the support of privately contributed investments.[citation needed]....
Incorporation and powers[edit]
Public-benefit corporations are generally governed by boards of directors, which are appointed, rather than elected, and, internally, reflect bureaucratic forms. The corporation is government-owned and performs a specific, narrow function for the public good.
Public-benefit corporations are most often created by statute. In many Commonwealth countries, public-benefit corporations continue to receive charters from the British monarchy. In the United States, they receive their charters usually from states, but possibly from the federal government.
Public authorities are usually created with a specific mandate, such as the construction of bridges, mass transit, etc. Unlike departments or ministries of the state, these corporations usually are enabled by statute to raise revenues through bond issues.
For more information, read below about individual jurisdictions.

On Public-benefit corporation page there is a shorter list of states than exists on the  Benefit corporation page, Maine is found in the shorter list for the page that describes public benefit corporations as listed above. The majority of states on that list just state their public benefit corporations as corporations dedicated to traditional public services. The listing for the state of Massachusettes is an example:



Upon first encountering the listing for Maine it said only this:
In the state of Maine, public-benefit corporations:
  • are designated as a public-benefit corporation by statute; or
  • are organized for a public or charitable purpose and is required to distribute assets to a similar tax exempt organization upon dissolution; or
  • have elected to be a public-benefit corporation.
I edited that entry to include The Maine Constitution's Article IV Part Third Section 14

Section 14.  Corporations, formed under general laws.  Corporations shall be formed under general laws, and shall not be created by special Acts of the Legislature, except for municipal purposes, and in cases where the objects of the corporation cannot otherwise be attained; and, however formed, they shall forever be subject to the general laws of the State.
 and a brief history of how the Maine legislature wriggled its way around the Maine Constitution  to construct the ever expanding network of state corporations and how Maine legislature has defined the meaning of "public benefit" in a way that conflicts with the meaning of public benefit corporations as found on the Benefit corporation page, which is consistent with Oregon's statute  HB2296 from which I quoted above.

The two terms "Public Benefit Corporation" and "Benefit Corporation" sound so similar that at first glance one would assume  that they refer to the same thing, but as testified by the two separate pages on Wikipedia, they are in fact entirely different, although the similarity in their signifiers seems intended to superficially obscure that difference.

I was surprised to find New York State on both lists but on examination of the listing of states that have passed Benefit Corporation Statutes found on the Benefit corporation page, I discovered that the verification link for New York State does not lead to a statute but to a white paper. New York is one of those states for whom Maine State Inc's rationalization that other states are instituting similar policies holds true but New York's constitution permits the state to charter corporations where as Maine's Constitution does not and neither does the state of Oregon which is very successful in attracting the large international corporations with which the boards of the Maine State corporation would like to populate Maine- and yet the state of Maine appears to be using new York State as its justifying model and not the state of Oregon.

The same whitepaper is used to validate that multiple states have passed Benefit Corporation legislation but does not provide a link or identifying information about said bills. The rhetoric used in the white paper has little in common with Public Benefit statutes passed by Oregon and New Hampshire or with the description found on top of the page wherein the list is located. Instead it sounds all too familiar to this research blogger as the following excerpt demonstrates:

The sustainable business movement, impact investing and social enterprise sectors are developing rapidly but are constrained by an outdated legal framework that is not equipped to accommodate for-profit entities whose social benefit purpose is central to their existence. The benefit corporation is the most comprehensive yet flexible legal entity devised to address the needs of entrepreneurs and investors and, ultimately, the general public. Benefit corporations offer clear market differentiation, broad legal protection to directors and officers, expanded shareholder rights, and greater access to capital than current alternative approaches. As a result, the benefit corporation is also attracting broad support from entrepreneurs, investors, legal experts, citizens, and policy makers interested in new corporate form legislation
The implication of slipping redistribution of wealth policies such as have been instituted in the state of Maine into the state governments of the United States, under the guise of "public benefit" rhetoric is huge.

The states for which the whitepaper is used for verification are California, Hawaii, Illinois, Louisiana, Massachusetts, Maryland, New Jersey, New York, Pennsylvania, South Carolina, Vermont, and Virginia. I challenged the veracity of the sources for all as is seen as a notation that says "not in citation given".

 The Benefit corporation Wikipedia page begins with these words:
In the United States, a benefit corporation or B-corporation is a type of for-profit corporate entity, legislated in 28 U.S. states, that includes positive impact on society and the environment in addition to profit as its legally defined goals. B corps differ from traditional corporations in purpose, accountability, and transparency, but not in taxation.

The Public-benefit corporation page lists the Benefit corporation  page on its "See Also" list, from which I gather that the term B-Corporations signifies the meaning found on the Benefit corporation  page, which is different from the meaning found on the Public-benefit corporation page.

 This is how it is stated on the See-Also List on the Public-benefit corporation page.

I have been researching Oregon in conjunction with my efforts to find American slip- casting productions with whom Andersen Design can collaborate. Contrary to the world view of the authors of Maine's economic development policies, I am finding many significant differences between Oregon's economic development policies and those of Maine, That's for another story but here is a teaser from Oregon's Economic Development  (ESB = Emerging Small Business)

ODOT’s region and district management staff select projects based on the needs of the region of the state and the interest in creating contracting opportunities for ESB firms. In selecting projects, consideration may be given to ensuring projects do not overuse any one particular trade and that projects are evenly distributed to ESB firms across the state. In the 2011-2013 biennium, ESB firms completed 175 projects totaling $8.1 million throughout the state   (emphasis mine)

Notice that the philosophy in the above is distinctly different from the targeted sector and special interest goals pursued by the corporation of Maine.

Related Posts:

New Hampshire Passes Benefit Corporation Certification Bill


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