Introducing the legal requirement for Certified
B Corporations in Australia
A new accountability for stakeholder governance
For Certified B Corporations around the world, the legal requirement is a critical part of accountability. It sits alongside a B Corporation's social and environmental performance and commitment to transparency.
We started exploring the benefit company model in Australia in 2012. We're excited to announce we can meet the goals of the model without the legislative reform. In 2020 we have a new pathway for making this important commitment in Australia.
The importance of stakeholder governance
The B Corp legal requirement is a core element of certification demonstrating that all B Corps – no matter where they are in the world – share a commitment to pursue profit and purpose. The legal requirement demonstrates that companies hold themselves to a higher standard of accountability for their decisions. Companies commit to consider the impact of their decisions on all stakeholders – employees, customers, suppliers, shareholders, community, and the environment.
The legal requirement helps companies protect mission through capital raises and leadership changes, and aligns investors (and potential investors), directors, founders and management.
The B Corp legal requirement in Australia
In Australia, a company can meet the B Corp legal requirement by amending its company constitution - or governing documents for other eligible forms - to include the legal requirement language.
Australian law permits a company to amend its constitution to set out its objects,1 which means that a company can include a purpose in its constitution.
Before making this change, we recommend seeking legal advice for your specific circumstances, particularly if you are a public company or have complex shareholdings.
1 Corporations Act 2001 (Cth) s 125(2).
Wondering when you need to make this change?
As of 1 September 2020, Certified B Corps have until their next recertification or March 2022 - whichever is later - to make the amendment.
Aspiring B Corps have 12 months from certification to make the amendment.
Check your recertification date
Resources to meet the legal requirement
Our legal partners have compiled resources to make meeting the legal requirement as smooth as possible.
B Lab Australia & New Zealand recommends seeking legal advice before making changes to your constitution.
For B Corps, a commitment to purpose is central to your certification. But what does stakeholder governance and the Declaration of Interdependence look like in practice?
Watch this conversation featuring Geoff Manchester from Intrepid, Tim O'Brien from Hatched, and Kristy Dixon from Marque Lawyers to explore what good governance looks like in everyday business.
Bringing the legal requirement to life
FAQs about the legal requirement
Explore these answers to our frequently asked questions.
As a Certified B Corp, when do I need to make this change?
Certified B Corporations have until their next recertification or March 2022 – whichever date is later – to make the change.
Can I amend my constitution using my own language?
B Corporations can add additional clauses or wording beyond the legal requirement to suit their company's needs or mission. However, to remain certified, B Corporations cannot remove language from the legal requirement clauses.
Do New Zealand B Corps need to meet the requirement?
Not at this time. We are currently working on a legal requirement for New Zealand B Corps and anticipate this change in the near future.
Does making this change earn points in the assessment?
Yes, you can access up to 7.5 points in your next assessment for adopting the legal requirement.
As an aspiring B Corp, when do I need to make this change?
You have up to 12 months from certification to make this change. However, if you choose to make the change before certification, you can gain up to 7.5 points towards your B Impact score.
Once I've made the change, what's next?
Implementing the legal requirement in your organisation will mean actively consdering all stakeholders in your strategy and decision-making. As a B Corp, it's likely that you do this to some degree already, and this will formalise those values.
I'm a sole trader or small business. Does this affect me?
All B Corps need to meet the requirement through amending their constitution or other governing documents. Watch the recording of our webinar to explore what the legal requirement looks like in practice.
Where to get advice
If you need help with the changes, these B Corp law firms are offering an initial, obligation-free half hour consult to answer questions or discuss any tailored assistance.
Have questions about the legal requirement?
Join us for office hours on 24 November from 1-2 PM AEDT.