The Steps to take to become a Benefit Corporation in Ohio

Businesses within the State of Ohio now have the option of becoming a Benefit Corporation. A Benefit Corporation is a for-profit corporation that has both for-profit and charitable or beneficial purposes. This article provides the steps a new or existing corporation will need to take to become a Benefit Corporation within the State of Ohio.

In order to create a new for-profit corporation in the State of Ohio, the articles of incorporation will have to be completed and filed with the Ohio Secretary of State. The same articles of incorporation are completed if a traditional for-profit corporation or a Benefit Corporation is incorporated. The differences in completing the articles of incorporation are:

  • Only the name of a Benefit Corporation is allowed to contain the letter “b-“ or the word “benefit” as a prefix to the corporate designation (think inc, corp, etc.).
  • The purpose clause of a Benefit Corporation MUST contain a “beneficial purpose.”
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So, what is considered to be a “beneficial purpose?” The Ohio Legislature has defined a “beneficial purpose” to mean that the corporation is to have a “positive effect or to reduce one or more bona fide negative effects of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific, or technological nature for the benefit of” constituent groups or interests OTHER THAN the corporation’s shareholders. In essence, the Benefit Corporation is making it crystal clear to its shareholders that the sole purpose of the for-profit corporation is NOT to maximize the dividends distributed to the shareholders.

What is a for-profit corporation to do that is already in existence but would like to become a Benefit Corporation? The existing corporation must file with the Ohio Secretary of State an amendment to its articles of incorporation amending:

  • the corporation’s name if the corporation would like to include the letter “b-“ or the word “benefit” in its name, and
  • the corporation’s purpose clause to ensure that the purpose clause contains a “beneficial purpose” as discussed above.

This article is meant to provide you with the information necessary to incorporate or become a Benefit Corporation in the State of Ohio. Stay tuned for additional articles on the unique operational requirements of Benefit Corporations and what it means to be become a certified b-corporation.

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Chris Corpus

Founding Partner at Corpus Law Inc

This article does not provide legal advice or create an attorney-client relationship. If you have any questions or would like to learn more about this topic or if you have other legal questions, do not hesitate to contact Chris Corpus, Esq. of Corpus Law Inc at 216-973-2475. Copyright Christopher A. Corpus 2024.