Tennessee businesses can now form for profit benefit corporations with the Division of Business Services. This new entity type is part of the For-Profit Benefit Corporation Act that went into effect Jan. 1.
The classification comes from the social entrepreneurship movement that combines running a profitable business with improving society. A for profit benefit corporation is similar to a standard for profit corporation, but is managed in a way that considers the public benefit purpose(s) listed in its charter as well as the financial interests of its owners.
Popular examples include outdoor clothing company Patagonia and project funding site Kickstarter.
“The new law provides entrepreneurs one more option when considering the formation of their company here in Tennessee,” said Secretary of State Tre Hargett. “This feature allows an organization to create value for its owners while also formally committing the corporation to its societal causes.”
Both for profit corporations and for profit benefit corporations are required to file an annual report with the division each year, but for profit benefit corporations must also prepare annual benefit reports to share with shareholders and the public.
Contact the Division of Business Services at (615) 741-2286 or TNSOS.CORPINFO@tn.gov. For more information, visit sos.tn.gov/business-services.
Source: Tennessee Secretary of State