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What is involved with the legal change?

If You Are Not A UK Based Business

If you are not a UK business you may still find the below interesting to read through as it will give you a flavour of the intent behind the legal component of B Corp.

However, you will need to find out what the specific legal pathway is for your country - it varies from jurisdiction to jurisdiction.

To do that you can visit the following link; at the bottom of the page is the option to search your legal requirements by country:  B Corp Legal Requirements

If You Are A UK Based Business 

This article does not constitute legal advice and information herein may have been updated by B Lab. This article is aimed at entities that are:

  1. Based in the UK
  2. Not publicly traded
  3. Not a wholly-owned subsidiary

It does not constitute legal advice and B Lab may alter the process. We recommend you look at the B Corp Legal Requirements page in case of any updates to the process.

A key component that has cemented B Corps reputation as a community of committed change-makers is the legal form it must adopt. The legal form requires the company to consider all its stakeholders in the running of the organisation, not just the shareholder.

In terms of eligible legal forms prior to certifying, any company can apply for B Corp certification as long as it:

  1. Generates the majority of its revenue from trading
  2. Competes in a competitive marketplace
  3. Is NOT a charity
  4. Is NOT a public body or otherwise majority-owned by the state

This includes CLGs, CLSs, and CICs, as long as they are not charities.

The legal change involves an amendment to a company’s Articles of Association.  It uses Companies Act Article 172 as the legal basis to ensure a B Corp enshrines a commitment to:

  • creating a material positive impact on society and the environment through its business and operations
  • not putting shareholder interests above other stakeholder interests, including employees, suppliers, society and the environment

It does not create additional liability for Directors, but it does give additional rights to shareholders to hold Directors accountable for taking these various stakeholder interests under consideration: community, environment, workers, suppliers, society etc. So, under the change, Directors become responsible for evidencing these considerations.

Limited Liability Partnerships

Limited Liability Partnerships (LLPs) can also become B Corps. Examples that have seen LLPs certify as B Corps include private equity firms (such as TowerBrook, InvestIndustrial and Helios) and law firms (such as Bates Wells Braithwaite).

The purpose of the legal change in the case of LLPs is to ensure the LLP promotes its success in such a way that it has a material impact on society and the environment, as a whole. As such, the expectation is that each of the Members and each member of the Management Board must act in the way he or she considers, in good faith, most likely to achieve that goal, with regard to a variety of matters.

More detail can be found at the end of the Legal Requirement document attached below.

Documents to Review

B Corporation: Legal Pathway
An overview of what is involved

The Legal Requirement for a B Corp in the UK - An Explanation
A detailed exploration of the legal change and how it was decided upon.

Agreement for B Corp Certification
The agreement all certifying B Corps take on as a B Corp.

Related Questions

How does being a B Corp, with its legal change requirement, affect your ability to sell the company?

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  1. John Featherby

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