Thursday, November 10, 2016

Maintaining Your Minnesota Public Benefit Corporation Status

It can happen to anyone: Despite good intentions, you miss a payment deadline.  Then the grace period lapses, and you’re stuck paying a late fee.

It’s no different with your Minnesota annual business renewal.  Miss the Secretary of State’s filing deadline, and, at a minimum, you have to pay a late fee.  Let it go a little longer, and you may be facing administrative dissolution.  But as a corporation or an LLC, you can likely be reinstated just as soon as you (eventually) file your renewal paperwork and pay up.  However, as a Minnesota public benefit corporation – a corporation formed under Chapter 304A of the Minnesota Statutes – the stakes are a little higher.  

Let’s start from the beginning.  In order to form a Minnesota public benefit corporation, you must file Articles of Incorporation that are not only compliant with the Minnesota Business Corporation Act (Chapter 302A of the Minnesota Statutes), but that also (i) state the type of public benefit corporation you will be, i.e., a general benefit corporation, a general benefit corporation pursuing a specific, defined public benefit purpose, or a specific benefit corporation, and (ii) contain the words “general benefit corporation” or “specific benefit corporation” or the designations “GBC” or “SBC” in your corporate name.  Regardless of which type you choose, the standard rationale for forming a public benefit corporation is to provide a positive societal impact through the corporation’s operations.  

In Minnesota, all public benefit corporations are required to file an annual benefit report with the Secretary of State on or before each March 31.  The report provides information about the corporation’s operations for the 12-month period ending on December 31 of the prior year.  A modest $35 filing fee must accompany the annual benefit report, or $55 for expedited service.

If you miss the March 31 deadline, the Secretary of State automatically revokes your public benefit status.  

Following revocation, you have a 30-day period in which to reinstate your public benefit status by (i) filing the current year’s annual benefit report and (ii) paying a hefty $500 fee, or $520 for expedited service or online filings.  

If, during this 30-day period, you determine that your corporation can actually forego its public benefit status without harm (perhaps it’s no longer critical to your operations, or the reporting and compliance obligations are too burdensome), you must nevertheless take steps to ensure its corporate existence continues.  Within 30 days of revocation, you must amend your Articles of Incorporation to comply with the Minnesota Business Corporation Act by removing any public benefit corporation designations and replacing them with “Inc.,” “Company,” “Corporation,” or similar designations. 

It all comes down to this: If your public benefit status in Minnesota is revoked – and you fail to either reinstate your status within 30 days of revocation or fail to change your corporate name within that same 30-day period – your corporate existence in Minnesota automatically expires.  In other words, your corporation – as either a public benefit corporation or general corporation – is gone, and there’s nothing more you can do about it except start over.

If you choose to reinstate your public benefit status within the 30-day window, make sure you don’t get revoked again.  The second time public benefit status is revoked, the corporation is prohibited from reinstating for three years.  

The morale of the story, of course, is to comply with all annual state filing deadlines.  Keep your contact information with the Secretary of State current, or talk with your attorney about the possibility of the services of a registered agent, who can notify you of filing deadlines in advance.

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