Minnesota Public Benefit Corporations

Milda K. Hedblom, J. D., Ph.D.,

hedblom@visi.com

651 645 5051

New Option for Broadband Services Entity

• Under MN corporate law --new option to organize for-profit but socially minded businesses

• Minnesota Law–Effective January 1, 2015

• New Form of Private Public Partnership

How It Works

• Public Benefit Corporations must state a duty to pursue public benefit

• Two Types:a. General benefit corporations—pursue net material positive impact from

business and operations on society, environment and the well-being of

present and future generations and may state a specific benefit as well.

b. Specific benefit corporations—pursue one or more specific positive impacts on specified persons, entities, communities or interests other than

shareholders (in their capacities as shareholders). Allows focused mission

rather than the general social benefits of the general benefit form.

How It Works

• Investment may combine both public and private investment

• Directors obligated by statute to consider (1) stated public benefit purpose (2) interests of those constituencies (3 pecuniary interests of the shareholders (but no presumptive priority)

• Accountability—shareholders have the right to bring an action for failure to pursue public benefit. No rights of suit to government or third parties (unless for consumer fraud if no public benefit provided).

• Annual reporting to Secretary of State’s office

• Exit—shareholders have share redemption rights

How Communities Can Use Public Benefit Corporations for PPPs

• Private Investors can share in community building and realize return on investment

• Communities can share in community building and realize return into the community through Public Benefit Corporation purposes

• Tools communities might use:

>EDA loans>Form a non profit with Community assets to invest as shareholders