Flexible Purpose Corporation

Flexible Purpose Corporation

A corporation in which the members of the board of directors have statutory duties other than making a profit for shareholders. A flexible purpose corporation may be formed for many purposes, such as to provide steady jobs to employees or to protect the environment. In other words, a flexible purpose corporation is not prohibited from earning and distributing profits, but is expected to do other things as well.
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In the first seven months after California adopted its legislation allowing for both the B corporation and the more limited corporation known in California as the flexible purpose corporation, 60 of the 75 corporations incorporated under the new provisions were B corporations.
Despite not experimenting with other business forms, such as California's flexible purpose corporation or Vermont's low-profit LLC, Massachusetts law otherwise provides some latitude for socially minded business owners to incorporate their CSR goals.
(45.) See Phila., Pa., Code [section] 19-2604(10) (2013) (granting tax credit to limited B Corps); see also Christen Clarke, Comment, California's Flexible Purpose Corporation: A Step Forward, a Step Back, or No Step at All?, 5 J.
(106.) See supra notes 57-60 and accompanying text (outlining L3C and flexible purpose corporation requirements).
CODE [section][section] 2500-17 (West 2013) (authorizing flexible-purpose corporations in California); see also Dana Brakman Reiser, The Next Big Thing: Flexible Purpose Corporations, 2 Am.
flexible purpose corporation. The stated purpose of these entities is to
The flexible purpose corporation is a sort of benefit corporation
lite: the flexible purpose corporation enabling statute merely requires
The Flexible Purpose Corporation originated in California, and was tailored to fit within that state's existing corporate code.
As with other types of state law corporations, whether a benefit corporation or a flexible purpose corporation can choose S corporation status depends on whether it meets the eligibility requirements for that status.
If a benefit corporation or flexible purpose corporation is required to be a C corporation because it does not meet one or more of the S corporation requirements, then the organization will be subject to the federal corporate income tax and its state equivalent, if any.
If instead a benefit corporation or a flexible purpose corporation is eligible to choose S corporation status and in fact elects to do so, then the income and permissible deductions of the organization pass through the corporation to its shareholders.
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