Companies in the UK can take a number of forms. Most companies are either a public limited company (plc) or a private company limited by shares.
So where do “B Corps” fit into this? “B Corp” status is not a recognised concept under UK company law. All the status means is that the independent charity “B Lab” has certified the company as a “B Corp”. Limited liability partnerships (LLPs) can also be certified as B Corps.
So, from a company law perspective, nothing changes when a company gets “B Corp” status (a private company limited by shares will remain a private company limited by shares). However, the “B Corp” certification demonstrates that the company meets high standards with regards to its positive impact on governance, workers, community, environment, and customers.
There are a few key steps in the B Corp certification process. The most rigorous of these is an impact assessment involving over 300 questions in which businesses must score at least 80 points. There is also a legal requirement (which we often help our clients with): to achieve B Corp certification, B Lab requires UK companies to add additional wording into their articles of association reflecting the B Corp values. The additional wording can be found here.
The practical impact of the changes to the articles are that:
- The company must operate in a way which is consistent with its new objects, including a requirement to have a positive impact on society and the environment
- The directors must act in a way so as to achieve those objects taking into account specified factors including the interests of the company's employees and the impact of the company's operations on the community and the environment
- The company must publish an impact report for each financial year
We’ve helped a number of our clients change their articles in order from them to apply for B Corp status. Please contact us if you would like to learn more!