Explainer-What is a public benefit corporation, the Anthropic legal structure?

Public benefit corporations, or PBCs, are a unique legal structure designed to balance profit with broader social interests. Unlike traditional corporations, PBCs are required to consider the impact of their actions on those affected by their operations and to achieve their stated public benefit or mission.

Delaware, a state that hosts many large publicly traded companies, introduced PBCs in 2013 to address potential negative consequences of corporate behavior. While a PBC aims to generate profits for its investors, its directors and executives must also weigh the interests of those impacted by the company's actions and work towards its public benefit.

To establish a public mission, PBCs must include language in their charter describing their purpose. For instance, Anthropic, the developer of Claude, has stated that its public benefit is to responsibly develop and maintain advanced AI for the long-term benefit of humanity. Similarly, OpenAI Group, developer of ChatGPT, has set its mission to ensure that artificial general intelligence benefits all of humanity, including through AI research.

Although PBCs remain a small part of the stock market, their presence is growing. Examples of publicly traded PBCs include Lemonade, an insurer that seeks to deliver insurance products with charitable giving as a core feature, and Warby Parker, an eyewear maker focused on providing access to products and services that promote vision and eye health.

PBCs operate under a board structure protected from legal liability when making informed, unbiased decisions that consider their three main interests: investors, the public benefit, and stakeholders impacted by the company's actions. However, the board may not resolve conflicts among these interests in favor of shareholders.

In the case of AI company OpenAI Group, its board is mandated solely to consider its mission and not the interests of shareholders when addressing safety and security issues related to the OpenAI enterprise. This approach was demonstrated when the company halted the release of its latest model due to security concerns.

While there is no legally required independent auditing process to ensure compliance with a company's public mission, some PBCs have chosen to seek certification from B Lab, a Philadelphia-based nonprofit, to demonstrate adherence to social and environmental practices. Companies that receive this certification are referred to as B Corps.

Investors can take legal action against a PBC's board if they fail to comply with its public benefit. According to Delaware law, the plaintiff must own at least 2% of the stock or hold stock worth $2 million to pursue such a case. Delaware corporate law, developed through court rulings, is relatively limited in guiding the application of PBC law.