Morrison Foerster’s MoFo Impact blog provides insights on the latest news, developments, and trends in the impact and social entrepreneurship space. Through MoFo Impact, Morrison Foerster attorneys dedicated to impact investing and social enterprise work offer a real-time assessment of the developments in matters that are shaping the industry. Here, we examine the unique challenges faced by social enterprises and impact investors, including issues related to impact investments, disclosure requirements, hybrid corporate forms, fiduciary duties, and beyond.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Susan (“Suz”) co-chairs the ESG + Sustainability and Social Enterprise + Impact Investing practices. Her practice focuses on late-stage financings, secondaries, and other corporate transactions for investors, such as SoftBank and Temasek, and on investments for some of the top investors dedicated to impact, from “impact first” foundations to family offices to private equity funds. She co-led the drafting group for the first of the new corporate forms (the Social Purpose Corporation in California), has created hybrid/tandem corporate structures and crafted debt and equity instruments that blend impact with traditional financial terms, and has used corporate law to develop creative capital market solutions to pressing environmental problems. She also advises the boards of public and private companies on corporate governance and fiduciary duties as applied to sustainability and climate change.She was named a California Lawyer Attorney of the Year (CLAY) in 2012 and 2016 by Daily Journal and the Most Innovative Lawyer in North America in 2015 by the Financial Times.Leading Business AdvisorA powerhouse negotiator, clients note that “you cannot get a better corporate counsel” and that Suz “understands the big picture, could not be more responsive, and understands the business” (The Legal 500 US). She has extensive experience providing corporate and finance advice to companies and investors in connection with growth equity financings and secondaries, with particular experience in late-stage investments that have come to rival traditional strategic acquisitions in size and significance. Her experience includes leading some of the highest-profile late-stage investments over the past few years, including notable transactions for SoftBank Group (in the two largest private tender offers in history) in its $7.7 billion investment in Uber, $4.4 billion investment in WeWork, further $10 billion investment in WeWork, $1 billion investment in SoFi, and $250 million investment in Kabbage. She has also advised Temasek on its $800 million investment in Verily Life Sciences, Intel on its equity investment in Cloudera, and each of Fortress, TPG Rise, Vision Ridge Partners, Generation Investment Management, and Pontifax AgTech in numerous mid- to late-stage investments in clean technology, sustainability, education, food, and agriculture technology.Social Enterprise and Impact InvestingSuz is the go-to legal resource for social enterprises (for-profit and non-profit companies focused on social or environmental purpose), impact investors (investors interested in social or environmental returns), and mainstream companies developing environmental, social, and corporate governance policies. With deep expertise in the impact investing model, institutional investors exploring the space turn to her for creative solutions and her ability to structure both investments and companies to emphasize impact and returns.She represents a wide range of investors who are focused on impact, from foundations like the Gates Foundation, The Nature Conservancy, and The Rockefeller Foundation, to family offices like Armonia, Cornerstone Capital, Emerson Collective, New Island Capital, and Omidyar Network, to private equity funds like Goldman Sachs, TPG Rise, Vision Ridge Partners, and Generation Investment Management, in their equity investments in companies and projects that are focused on generating impact and returns for investors. She has deep experience and expertise ensuring energy, sustainability, and other investments have positive impact through the use of new corporate forms, hybrid or “tandem” structures with non-profits and for-profits, and alternative debt and equity instruments.Notable work in this space includes the establishment of a tandem structure, The Carbon Endowment, to retire coal assets at scale while securing a revenue stream for community reinvestment and job training in coal communities. Suz also advised on the structuring of Common Sense Growth as an extension of the non-profit Common Sense Media (to invest in companies that address issues related to children, education, and technology), the establishment of a fund for TPG Rise to provide debt financing to Echoing Green fellows, the spin-out of PRX from Public Radio International (to generate new revenue flows up to the non-profit), the establishment of a for-profit joint venture with non-profit Medicines360 (to allow the non-profit to distribute its healthcare products to women in the developing world), and the structuring of a for-profit evergreen fund that allows The Nature Conservancy to aggregate return-seeking and donor capital in order to invest in preserving our natural resources. She has also advised numerous clients on converting to a public benefit corporation or social purpose corporation model (which requires balancing traditional fiduciary duties against a social or environmental purpose), including This American Life, Revolution Foods, Rise Labs, and Beneficial State Bancorp.Suz also regularly advises boards of directors of private and public companies, special committees, and CEOs on corporate governance, particularly the intersection of fiduciary duties with sustainability, and focuses on environmental, social, and governance issues.Unmatched Cleantech and Renewable Energy ExperienceIn addition to founding and chairing the firm’s Social Enterprise and Impact Investing Group, Suz serves as Chair of Morrison & Foerster’s Energy Group and has extensive experience representing start-up to late stage private companies in the clean technology or sustainability space. She provides corporate and finance advice in connection with equity and debt financings, mergers, acquisitions, asset purchases and sales, reorganizations, and joint ventures. She has experience working with renewable energy start-up companies and renewable energy developers in the solar, wind, and biofuels industries. Suz has assisted renewable energy start up companies with raising venture capital and has advised renewable energy developers on project acquisitions.Suz’s representative renewable energy, cleantech, sustainable, and social enterprise clients include Anaergia, Change.org, EDF Renewables, E.ON, Etsy, First Look, OneSun, Planet Labs, Rising Sun Energy, RSF Social Finance, SustainBio, Trelys, Inc., Wikipedia, and Xpansiv.Board Activity and Thought LeadershipMs. Mac Cormac was a founding board member of the Sustainability Accounting Standards Board (SASB), is a member of the board of directors of Business for Social Responsibility (BSR), the Ceres President’s Council, and the Earth Genome Project, and is an advising board member of the Committee Encouraging Corporate Philanthropy’s Strategic Investor Initiative.She has joined the faculty (teaching on the intersection of sustainability and fiduciary duties) at both the Stanford Director’s College and the Northwestern Corporate Counsel Institute and is an adjunct professor at UC Berkeley School of Law, teaching a course on Social Enterprise.

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Susan (“Suz”) co-chairs the ESG + Sustainability and Social Enterprise + Impact Investing practices. Her work focuses on advising innovative sustainable companies and investors, with particular expertise on ensuring investments have positive impact through use of new corporate forms, hybrids, alternative debt and equity instruments and disclosure.

Susan (“Suz”) co-chairs the Environmental, Social, and Governance (ESG) and Social Enterprise + Impact Investing practices. Her work focuses on advising innovative sustainable companies and investors, with particular expertise on ensuring investments have positive impact through use of new corporate forms, hybrids, alternative debt and equity instruments and disclosure.

<h5 dir="ltr">As Chair of the firm’s Social Enterprise + Impact Investing and Energy + CleanTech practice groups, I find it uniquely fulfilling to help emerging companies and their investors channel great ideas and good intentions into tangible, positive change.</h5>How I Help: I have extensive experience representing startup to late-stage private companies primarily in the clean technology, renewable energy and sustainability space. I counsel on corporate and finance matters in connection with equity and debt financings, mergers, acquisitions, asset purchases and sales, reorganizations, and joint ventures. I’m frequently called upon for my expertise in new corporate forms, hybrid of “tandem” structures with non-profits and for-profits, and alternative debt and equity instruments. I also regularly advise boards of private and public companies, special committees, and CEOs on corporate governance as it relates to sustainability and CSR.Favorite app or tech product: Strava. I love tracking the miles I run each week.Favorite place for client meetings: A walk in the PresidioLife beyond the law: When I’m not preaching to the world about the power of corporate form, I spend my time outside the office with my three young sons. I currently coach my youngest’s little league team. Go Pirates!

Susan Mac Cormac

Alfredo Silva is a partner in the Transactions Department, co-chair of the firm's Social Enterprise and Impact Investing Group, and a member of the ESG Strategy Committee. Alfredo represents companies and investors in a broad range of corporate and securities law matters, with a focus on businesses in the life sciences, agtech and fintech sectors. Alfredo’s practice includes capital markets transactions, venture capital, growth equity and corporate venture financings, tender offers and other secondary offerings, digital token matters, and mergers and acquisitions. Alfredo also helps clients leverage environmental, social and governance (ESG) factors to evaluate risk and opportunities and to invest responsibly in businesses seeking sustainable growth and impact.In his private company practice, Alfredo has served as company or investor counsel in early- and late-stage financings, minority strategic investments and impact investments in dozens of private companies, including representation of SoftBank and SoftBank Vision Fund in financings with a combined value of over $2 billion, Temasek in its $800 million minority investment in Verily Life Sciences, an Alphabet company, and Visa Ventures in strategic fintech investments around the world.In his public company practice, Alfredo counsels issuers on strategic transactions, such as the stock-for-stock merger of Marrone Bio Innovations, Inc. with Bioceres Crop Solutions Corp, as well as corporate governance and compliance with the U.S. federal securities laws and stock exchange listing standards, including advising on cutting-edge issues with respect to ESG disclosures and materiality assessments.In addition, Alfredo works extensively with nonprofit organizations, providing advice on fiduciary issues, entity formation, structuring and other corporate matters, and assists small businesses pro bono. He incorporated and continues to advise Illuminate, the nonprofit producer of The Bay Lights, a 25,000 LED sculpture on the western span of the San Francisco-Oakland Bay Bridge, in structuring, corporate governance, and project management matters. Alfredo currently chairs the audit committees of the boards of directors of Eat. Learn. Play. Foundation, a charity founded by four-time NBA champion Stephen Curry and The New York Times bestselling author Ayesha Curry to unleash the potential of every child, and Berkeley Repertory Theatre, an international leader in innovative theater whose shows have won eight Tony Awards, nine Obie Awards and a Pulitzer Prize, among many other honors.Alfredo is recognized by The Recorder as a 2013 Lawyer on the Fast Track, in 2014 was the inaugural recipient of the firm’s Kathi Pugh Award for Pro Bono Service, is a 2017 Lawyers Committee for Legal Diversity Fellow, and was the recipient of the American Bar Association’s 2023 National Public Service Award. Alfredo received his B.S. degree, cum laude with distinction, in Engineering Sciences (Chemical) from Yale College in 2004 and received his J.D. degree from Yale Law School in 2008. Alfredo speaks conversational Spanish and Mandarin Chinese, and spent a year at China’s Tsinghua University researching issues in intellectual property protection on a Fulbright Fellowship.

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Alfredo Silva is co-chair of the firms Social Enterprise + Impact Investing practice and member of the firm’s Pro Bono Committee. He represents public and private companies and investors in a broad range of corporate and securities law matters, as well as nonprofit organizations on entity formation, fiduciary issues, and structuring.

Alfredo B. D. Silva represents public and private technology companies and strategic and financial investors in a broad range of capital markets transactions, early- and late-stage financings, and corporate governance matters in a variety of industries, including Life Sciences, Health Tech, FinTech, and SaaS.

Alfredo Silva is co-chair of the Morrison Foerster Social Enterprise + Impact Investing practice and member of the firm’s Pro Bono Committee. He represents public and private companies and investors in a broad range of corporate and securities law matters, as well as nonprofit organizations on entity formation, fiduciary issues, and structuring.

<h5 dir="ltr">My job is to think creatively and balance competing interests to solve complicated problems, and the end result is that the companies I’m working with are able to raise the capital they need to grow, creating and maintaining jobs for others while bringing great products and services to consumers.</h5>How I help: I represent companies throughout their lifecycles, from entity formation to debt and equity financing to exit alternatives, including initial public offerings and mergers and acquisitions. I also counsel investors in venture financing, late stage / growth equity financing, strategic investments, secondary transactions, and impact investments in private companies in a wide variety of industries. Since I have a background in engineering, I get numbers, and often work closely with executives, finance teams, and financial advisors and analysts to model out complex capital structures, financing scenarios, and liquidity events. In doing so, I help clients analyze what’s possible, understand consequences of various transaction structures, and enhance their economics in deals in value from the tens of millions to the billions of dollars.Favorite app or tech product: I spend a lot of time these days checking Coinbase, seeing how the market reacts to developments in the cryptocurrency and blockchain spaces.Favorite place for client meetings: It’s great when you’re close enough with a client to catch up and talk shop at their house!Life beyond the law: Skiing at Lake Tahoe in the winter, weekends in Dolores Park in the summer, and travel to see family and friends in between.

Alfredo B. D. Silva

Benjamin Fox is a partner in the firm’s San Francisco office and a member of the firm’s Social Enterprise and Impact Investing Group. Benjamin’s practice focuses on the representation of clients in corporate and transactional matters, with a focus on investors and companies dedicated to pursuing social or environmental goals alongside financial returns.Benjamin counsels startup to late-stage private companies and venture capital and private equity investors, as well as family offices, private foundations, and public charities in early-stage and late-stage financings, mergers, acquisitions, asset purchases and sales, joint ventures, and hybrid or “tandem” structuring arrangements between nonprofit and for-profit entities. Benjamin has extensive experience working with investors and companies in the climate technology and infrastructure and sustainability space. He regularly advises clients on creative legal structures with respect to aggregating and deploying capital to maximize impact and returns.Benjamin earned his J.D. from the University of California, Berkeley, School of Law (Boalt Hall), with a certificate of specialization in both Environmental Law and Energy and Clean Technology Law. At Boalt, he served as an executive editor of Ecology Law Quarterly, a member of the California Law Review, and a judicial extern for the Honorable Edward M. Chen of the U.S. District Court for the Northern District of California. Benjamin received the Ellis J. Harmon Prize for best legal writing in Environmental Law and Policy and was a NAPABA Law Foundation Scholarship recipient for commitment to serve the Asian Pacific American community.Prior to law school, Benjamin worked for the U.S. Department of Energy in Beijing, China and spent a year at Taiwan’s Tunghai University researching renewable energy and urban development policy on a Fulbright Fellowship. He earned his B.A. with distinction and highest honors from the University of Michigan.

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Benjamin Fox is a partner in the firm’s San Francisco office and a member of the firm’s Social Enterprise and Impact Investing Group. Benjamin’s practice focuses on the representation of clients in corporate and transactional matters, with a focus on investors and companies dedicated to pursuing social or environmental goals alongside financial returns.

Benjamin Fox is an associate in the Morrison Foerster Corporate Department in the San Francisco office. Benjamin is a member of the firm’s Social Enterprise and Impact Investing and Energy and Clean Technology Groups.

<h5 dir="ltr">I feel fortunate to assist companies and investors focused on tackling our most pressing global environmental and social challenges.</h5>How I help: I provide counsel to companies from formation until exit, including in connection with corporate structure and governance, early- and late-stage equity financings, mergers and acquisitions, and joint ventures.  As a member of our Social Enterprise + Impact Investing Group, I frequently advise clients on the legal tools available to promote mission-driven businesses, including attracting non-profit and for-profit capital, and utilizing hybrid non-profit/for-profit structures and new corporate forms.  I also have a particular expertise in the renewable energy sector and work closely with investors, renewable energy developers and cleantech startups on a wide range of corporate matters.Favorite app or tech product: GuitarTuna. It’s pretty good at tuning my guitar.Favorite place for client meetings: At a baseball game. Fenway Park will always be the best, but other stadiums will suffice.Life beyond the law: Enjoying the great outdoors.

Benjamin Fox

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DELAWARE LEGISLATURE PASSES AMENDMENT ON PUBLIC BENEFIT CORPORATIONS

DELAWARE LEGISLATURE PASSES AMENDMENT ON PUBLIC BENEFIT CORPORATIONS | MoFo Impact

Michael P. Santos

In August 2013, the Delaware legislature added a new subchapter to the Delaware General Corporation Law (DGCL), allowing corporations to be formed as, or convert to, a public benefit corporation (PBC).<a name="_ftnref1" href="#_ftn1">[1]</a> A PBC is defined as a for-profit corporation “that is intended to produce a public benefit or public benefits and to operate in a responsible and sustainable manner.” Unlike traditional Delaware corporations, in which directors’ obligation to act in the best interests of the corporation and its shareholders is generally understood to mean maximization of stockholder value, directors of a PBC are required to balance its stated public benefit<a name="_ftnref2" href="#_ftn2">[2]</a> and the best interests of those materially affected by the PBC’s conduct alongside stockholder value in their decision-making.The impact community has viewed the PBC form since its adoption as an important tool to enable pursuit of social missions within the corporate construct. The PBC has also been an important symbolic marker for those social entrepreneurs committed to achieving impact goals and attracting impact-first investors. As investors have become more familiar with PBCs, and in order to promote the use of the form and board service by qualified individuals, the community has encouraged legislators to amend the rules applicable to PBCs to make it easier for corporations to adopt the new form and to clarify provisions around director liability and stockholder derivative litigation.In June 2020, both chambers of the Delaware legislature approved an amendment to the DGCL that will be immediately effective upon signing by the governor and, in addition to various changes applicable to Delaware corporations generally,<a name="_ftnref3" href="#_ftn3">[3]</a> will have the following additional effects on PBCs:<ul><li style="margin-bottom: 1em;">The DGCL currently requires two-thirds stockholder approval for (i) amendments to a certificate of incorporation that convert a conventional corporation into a PBC or convert a PBC into a conventional corporation and (ii) mergers that convert shares of conventional corporations into shares of a PBC or shares of a PBC into shares of conventional corporations. The amendment reduces this requirement from two-thirds to majority stockholder approval, the same standard that applies generally to amendments to a conventional corporation’s certificate of incorporation or merger.</li><li style="margin-bottom: 1em;">The amendment eliminates stockholder appraisal rights for (i) amendments to a certificate of incorporation that convert a conventional corporation into a PBC and (ii) mergers that convert shares of conventional corporations into shares of a PBC, to the extent such appraisal rights are not otherwise required under the DGCL irrespective of the effective PBC conversion.</li><li style="margin-bottom: 1em;">The amendment clarifies that a director will not be considered to have a conflict of interest when balancing stockholder value alongside the PBC’s stated public benefit and the best interests of those materially affected by the PBC’s conduct solely due to the director’s interest in stock of the corporation, except to the extent that such ownership would create a conflict of interest if the corporation were not a PBC. Additionally, absent conflict of interest, any failure on the part of a director to satisfy the balancing requirement will not constitute an act or omission not in good faith for the purposes of limitation of liability or indemnification with respect to such director, unless the PBC’s certificate of incorporation otherwise provides.</li><li style="margin-bottom: 1em;">The DGCL currently allows stockholders of a PBC to bring a derivative lawsuit to enforce the director fiduciary duties noted above. The amendment clarifies that any such derivative lawsuit may not be brought unless the plaintiffs own at least 2% of the PBC’s outstanding shares or, in the case of certain listed companies, shares with a value of at least $2,000,000 if such number is lower.</li></ul>For additional information on social enterprise forms, see <a href="https://www.mofo.com/special-content/impact-investing/">www.mofo.com/impact</a>. <a name="_ftn1" href="#_ftnref1">[1]</a> Delaware’s Public Benefit statute was amended by S.B. 75, effective as of August 1, 2015.<a name="_ftn2" href="#_ftnref2">[2]</a> A PBC’s stated public benefit purpose is built into the certificate of incorporation, and may include “positive effects[s]” such as “artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific, or technological” in nature.<a name="_ftn3" href="#_ftnref3">[3]</a> The DGCL provisions applicable to Delaware corporations are generally applicable to PBCs as well. The June 2020 amendments, among other things, also (i) authorize a corporation to include in its certificate of incorporation an exculpatory provision that eliminates or limits liability of directors for monetary damages for certain breaches of duty, (ii) clarify the types of events that give rise to the availability of emergency powers and the specific powers that may be exercised during an emergency condition, and (iii) permit a corporation to indemnify persons other than current or former directors or officers if such persons are successful in defending claims brought against them by reason of their conduct associated with the corporation.