Social Entrepreneurship and Uncorporations

Larry Ribstein’s pioneering analysis of alternative business forms during the late twentieth century highlighted the contractarian freedom that these forms provided. The rise of the LLC model was of particular interest to Ribstein, who assessed how this model brought greater freedom to those who held duties and obligations within the corporate structure. This Article takes up Ribstein’s mantle by assessing the development the alternative “social enterprise” business forms manifested in benefit corporations (BC) and flexible purpose corporations (FPC). Both forms allow an incorporated entity to articulate and pursue a social benefit alongside the maximization of shareholder returns. Despite its utility, the uptake of the social enterprise corporation, as assessed through a case study of California, appears underwhelming. Yet, by using the arc of the LLC uptake path as a comparative historical benchmark, the authors argue that there is hope that these new social enterprise corporations will see an increasing rate of uptake in the future.

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