PUTTING NEW SHEETS ON A PROCRUSTEAN BED: HOW BENEFIT CORPORATIONS ADDRESS FIDUCIARY DUTIES, THE DANGERS CREATED, AND SUGGESTIONS FOR CHANGE J. WILLIAM CALLISON* TABLE OF CONTENTS Introduction ................................................................................................. 86 I. Overview of Benefit Corporation Legislation .................................. 92 II. Problems and Dangers of Benefit Corporation Status ...................... 98 A. The Illiberalism Problem of General Public Benefit ................. 98 B. The Bipolarity Problem and Negative Inferences ................... 104 C. The Fiduciary Uncabining Problem and the Loss of Fiduciary Restraints ................................................................. 107 D. The Greenwash/Greenmail Enforcement Problem .................. 109 1. Greenwash Possibilities ..................................................... 109 2. Greenmail .......................................................................... 111 III. What Can Be Done? ....................................................................... 111 A. Forget Corporations and Use Limited Liability Companies.... 111 B. Adopt a Much Simpler, Contract-Based Structure for Benefit Corporations ............................................................... 113 Conclusion ................................................................................................. 114
* Partner, Faegre Baker Daniels LLP, Denver, Colorado. I dedicate this Article to an extraordinary group of Colorado corporate law practitioners and academics, who have wrestled with benefit corporation concepts and legislation for the last three years and from whom I have learned much over the last several decades. They include Bob Keatinge, Tony van Westrum, Cathy Krendl, Professor Mark Loewenstein, Mike Sabian, Allen Sparkman, Herrick Lidstone, John DeBruyn, Beat Steiner, and Sarah Steinbeck. I also thank the participants in the American University Business Law Review ’s Symposium, “Profits Plus Philanthropy: The Emerging Law of ‘Social Enterprises, ’ ” for their comments on an earlier version of this Article.
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