SPC incorporation provides broad regulations for all companies from startups to established corporations. Let’s say a business is already following clear and well-intentioned values, for example:
Declaring and sharing those values incorporated into your business allows companies to clearly state their business impact on their community.
You can file to become an SPC on your own. Becoming an SPC requires you to define your social purpose and file with the Secretary of State. Remember, it’s a good idea to check with an attorney to see what form of incorporation is best for your company.
Social Purpose Corporation legislation allows corporations to pursue financial profit along with a stated general and specific social and/or environmental benefits of its own designation. SPCs are required to notify prospective investors that their goals will not be limited to earning a profit. Its aim is to protect directors from shareholder legal action and was drafted and supported by the Washington State Bar Association. Filing as a Social Purpose Corporation is $200 in Washington state.
SPCs must issue an annual report that is available to the public and provides details on the general or specific social purposes, including the corporations efforts to promote its social purpose. It may include the annual objectives that it has set to achieve its purpose(s); the metrics used; how it has achieved or fallen short of the stated objectives; and how much money was spent in furtherance of the social purpose. It may be prepared in accordance with a third party standard, but that is not a requirement.
SPCs are managed by directors and officers run day to day operations. Directors may choose to include social purpose in decision making. Subject to corporate tax on net income, dividends are subject to personal income tax. There is currently no tax favored status. SPCs can seek capital as any other corporation, through equity or debt.
Washington State introduced the Social Purpose Corporation on March 30, 2012, and it became available as a legal corporate form June 7, 2012. The SPC model provides businesses the legal means to maximize shareholder profit through economic, social and environmental impact. Since corporations are established at the state level, this allows business to respond to what their local communities care about the most.
Washington State’s SPC is the only legislation that was supported by their State Bar Association. Social Purpose Corporations was House bill 2239, presented by representatives Pedersen (D), Goodman (D), Rodne (R) and Hudgins (D) and Senate bill SB 6230, presented by Senators Frockt (D), Chase (D), Kilmer (D), Harper (D), Pflug (R) and Keiser (D). It was signed by Governor Chris Gregoire on March 30, 2012 and took effect June 2012.