A few years ago, I participated in the drafting of California’s Flexible Purpose Corporation Act, Cal. Corp. Code § 2500 et seq.  In 2014, the legislature changed the name to “Social Purpose Corporations Act”.  SB 1301 (DeSaulnier).  The purpose of the act was (and still is) to provide an alternate form of corporation that provided greater flexibility to combine profitability with broader purposes.  In 2011, California also enacted a benefit corporation law.  AB 361 (Huffman).  Although both laws generated a fair amount of interest and a few incorporators, I have wondered whether either type of corporation would be able to access the public equity markets.

Last week, Laureate Education, Inc. filed a registration statement on Form S-1 for the initial public offering of its Class A Common Stock.  Based in Baltimore, Maryland, the company chose to redomicile in Delaware under its Public Benefit Corporation Law, Del. Code tit. 8 § 361 et seq. This is how the company describes its public benefit:

 Our public benefit is to produce a positive effect for society and students by offering diverse education programs both online and at campuses around the globe. By doing so, we believe that we provide greater access to cost-effective, high-quality higher education that enables more students to achieve their academic and career aspirations. Most of our operations are outside the United States, where there is a large and growing imbalance between the supply and demand for quality higher education. Our stated public benefit is firmly rooted in our company mission and our belief that when our students succeed, countries prosper and societies benefit. Becoming a public benefit corporation underscores our commitment to our purpose and our stakeholders, including students, regulators, employers, local communities and stockholders.

“Betwixt a benefit and an injury”

Notably, the prospectus includes a couple of risk factors pointing out, among other things, that the corporation’s focus on a specific public benefit purpose and producing a positive effect for society may negatively influence its financial performance.