Question about benefit corporations, how are their charters enforced, legally? Say a company registers as benefit corp with the mandate to never perform mass layoffs, or to cap emissions to X, or to never sell user data. Then the company leadership, at some point, violates this rule. What are the legal consequences for the company? Is it a fine? Does the corporation get dissolved and their assets become public property (and their IP, public domain)? Is the leadership arrested? (I do suspect the last is too extreme, since it's a civil, not a criminal matter...)
INALB from what I understand, getting certified as a B Corp depends on meeting a number of pre-determined conditions. As long as the company is in compliance with a specific percentage of these conditions, they qualify. From what I remember, it can be well under half. In other words, maintaining their charter does not depend on rigid adherence to the specific set of conditions they initially conformed with at founding, just that they conform with a set number of standards for social responsibility.
The real point is that shareholders can't force the company out of general compliance. Meanwhile, managers retain considerable latitude in determining how they will remain in compliance as the company grows and evolves.
But, in theory, shareholders still can fire the CEO, the new CEO can change any appointments, the company can fall out of compliance and still retain all assets and IP, correct? So it's more of a pledge with some safe-stops that makes it more robust than just a PR release, but it doesn't really legally guarantee the company will never use factories/data in a way that goes against their declared principles, then?
I have no idea what happens if a B-Corp gets stripped of its standing, or how easily it can convert to an S-Corp, but from what I understand, the whole point of the B-Corp is to make the scenario you described exceedingly unlikely. In other words, B-Corps exist to free managers from the pressure of these threats exactly, while submitting them to a discipline with demonstrably broad social utility. The assumption is that this is also benefits the kind of patient investors with long-range plans who recognize how counter-productive the market's prevailing short-termism has become. Under the B-Corp paradigm, liberation from this is seen as a competitive advantage.
As long as founders and managers run a profitable company within these parameters, they - and their investors - will be fine. Indeed, they can, in theory, pursue the kinds of opportunities that companies totally beholden to growing their quarterly returns have to pass up. What they don't have to deal with is some short-term "investors" who want to extract a large hit of quick cash before leaving the smouldering ruin of a once-decent brand in their wake.
