Introduction of Benefit Corporation Legislation21 Jan 2014
Date: 21 January 2014
Parliamentary Question by Assoc Prof Tan Kheng Boon Eugene:
To ask the Deputy Prime Minister and Minister for Finance whether the Ministry will consider introducing legislation, as was done in the US state of Delaware, to provide for some form of benefit corporation law which requires such for-profit 'B corporations' to explicitly address multi-stakeholder interests and pursue specific public benefit goals.
Reply by DPM and Finance Minister Tharman Shanmugaratnam:
Benefit Corporations are a new class of corporations that was started in the United States in 2010. To date, 19 of the 50 states have adopted Benefit Corporate legislation, the most recent being Delaware (July 2013). About 400 Benefit Corporations have been formed since.
The key benefit seen in such corporations appears to be protection from legal challenge (e.g. for not maximising shareholders’ returns). This may be an important consideration for corporations with a strong public benefit orientation in the US context.
In Singapore, a company incorporated under Singapore’s Companies Act can include in its Memorandum and Articles of Association that its main purpose is to pursue specific public benefit goals.
For listed companies, we amended the Code of Corporate Governance in 2012 to expand the roles of Company Boards. Apart from their duties to shareholders, Company Boards are now also responsible for identifying key stakeholder groups, recognising their impact on the company and ensuring that obligations to these stakeholders are understood and met. Companies must also consider sustainability issues e.g. environmental and social issues, in formulating their business strategies. Thus far, there has been no concerns raised that companies could face legal challenges for addressing these multiple stakeholder needs.
The Government is also doing more to support social enterprises (SEs). This includes providing tax incentives and seed funding to help cover start-up and operating costs, and a mentoring programme to strengthen the organisational capabilities of SEs.
We will monitor the US experience with Benefit Corporations and consider their relevance to Singapore at an appropriate time.