The new Legal Requirement for B Corps in Aotearoa NZ

We’ve shared this via email to our NZ B Keepers today - a big development for Aotearoa NZ B Corps!

For context - a core commitment of B Corps is to strive to create public benefit alongside profits, and to consider the impact of their decisions on all stakeholders, not just shareholders. For the past eight years, B Corps in Australia and Aotearoa New Zealand have signed the B Corp Agreement, in which you commit to these principles to meet the certification’s ‘legal requirement’. Throughout this time, our ambition was to create a formal legal pathway that brought shareholders to the table for business decision-making.

In September 2020, we announced this new pathway in Australia, where the legal requirement is met through amending a company’s constitution. In the last year we have sought guidance from lawyers and experts, and today, we’re excited to introduce the same legal pathway for Aotearoa New Zealand B Corps as well.

What does this mean?
Stakeholder governance is a commitment to operating a business with more than profit in mind. It means decisions are made not only to deliver returns for shareholders, but also to create positive outcomes for people, communities, and the planet. Adopting the B Corp certification legal requirement ensures this by embedding stakeholder governance into your company’s foundational documents. This is part of what makes B Corps leaders in the growing global movement to operate stakeholder-driven business.

What do I need to do?
To meet the requirement in Aotearoa New Zealand, businesses must update their constitution to include two clauses: the purpose statement and the stakeholder clause. You have plenty of time to make this change: as part of your certification, Aotearoa New Zealand B Corps must do this by 31 March 2023 or your next recertification, whichever is later.

Head to the website to learn more and access our how-to guide, which offers in-depth information on the legal requirement and how to implement it.

Also, meeting the requirement will also allow you to gain up to 7.5 points towards your B Impact score in the Governance section (unless you’ve already obtained full Mission Lock IBM points in your assessment).

An important conversation happening now in Aotearoa New Zealand
This announcement comes at an opportune moment: with the introduction of a bill to parliament this month to amend the Companies Act. The amendment makes it clear that directors can choose to take environmental, social, and other matters into account when acting in the best interests of the company. We would love to rally the B Corp community’s support for a submission in response to the legislation, bringing the B Corp perspective. If you are interested in being part of this, head over to this separate conversation.

Otherwise, if you have any questions that are not answered in the how-to guide, hit us up below!

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Cool! Just to double clarify…

Many of the smaller companies I’m working with don’t have a constitution of any kind. They are the just governed by the companies act.

So if that is the case they can just make the resolution?

Would that have to be sent to anyone like the accountant or lawyer or kept anywhere?

Good question, I understand that companies without a Constitution are governed solely by the Companies Act 1993. There is no other way to bind shareholders in the way needed, so in that instance they would need to adopt a constitution containing the required provisions. Companies adopt a new constitution in the same manner as which they amend one (i.e 75% special resolution of shareholders).

I suspect it would therefore be useful to get a template, short-form constitution in template form for small companies - noting that we can’t give legal advice, they have to form their own views. My understanding is it is possible to have a very simple document, that still relies on the Companies Act for much of the detail. However to get this template will need legal advice, which we can get onto.

Cheers
Andrew

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That would be super useful. I have a handful of clients scrabbling around for that right now. If one of the law firm/legal advisors involved with this could provide a template basic constitution for small businesses and sole traders here that would be amazing!

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Hey @Andrew-BLab - have we found any willing legal companies to provide a template for a constitution?

Hey, I’m currently helping a law firm with their B Cert and they have kindly offered to create a free basic template constitution for small Kiwi businesses. Watch this space!

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