In recent years, the concept of corporate social responsibility has evolved. Nowadays, many companies are concerned not only with making a profit, but also with having a positive impact on society and the environment. Benefit and Common Interest Companies (Sociedades de Beneficio e Interés Común (SBICs)) have emerged as a response to this new vision of business. This type of entity allows entrepreneurs to carry out their business activities for profit and, at the same time, contribute to the improvement of social and environmental welfare.
In this article, we will examine what a Benefit and Common Interest Company is, what its main features are and which steps you need to take to set one up in Spain.
Written by Abigail Sked
Paralegal
What is a Benefit and Common Interest Company (SBIC)?
A Benefit and Common Interest Company (SBIC) is a legal structure that seeks to combine a company's own profit-making objectives with a commitment to making a positive impact on society and the environment. This business model arises from the growing demand from consumers and investors for companies to adopt more sustainable and responsible practices.
Unlike traditional companies, which focus exclusively on maximising economic profit for their shareholders, SBICs have a dual mission:
- Economic profit making: Like any company, an SBIC seeks to generate profits and distribute profits to its shareholders.
- Positive social and environmental impact: SBICs must commit, in their Articles of Association, to generate a positive social and environmental impact through their activities and submit themselves to higher levels of transparency and accountability.
The legal recognition of SBICs provides a clear structure for entrepreneurs seeking to balance financial interests with ethical and responsible commitment.
Origin of the SBIC concept
The SBIC concept has its origins in US Benefit Corporations, also known as B-Corps. In recent years, European countries have also begun to adopt this corporate structure, such as Italy in 2016 (Società Benefit (SB)) and France in 2019 (Société à Mission (SàM)). In Spain, the SBIC is a relatively new legal model, having been established in the Tenth Additional Provision of Law 18/2022 of 28 September on the creation and growth of companies (Ley 18/2022, de 28 de septiembre, de creación y crecimiento de empresas).
Main characteristics of an SBIC
Some of the most important characteristics of Benefit and Common Interest Companies are the following:
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Dual commitment: profit and social/environmental impact
An SBIC should include in its Articles of Association the obligation to generate a benefit for society and/or the environment, over and above mere profit. This means that not only its financial success must be evaluated, but also its social and environmental performance.
To this end, it is worth noting the difference between the company's corporate objective and its purpose:
- The corporate objective (objeto social) is the activity of the company; it is the means of obtaining the resources for the realisation of the project's social purpose or goal.
- The purpose (propósito) is the positive impact for public or common benefit.
- --> The corporate objective of an SBIC, made up of its business activity or activities, must be fit to achieve both its profit-making corporate objective and also the common benefit purpose.
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Transparency and accountability
An SBIC must submit an annual report assessing the development of the social and environmental impact of its activities and responsible performance. This report shall be filed with the Commercial Registry and, after approval by the Board, shall be published and made available to the public on the company's website.
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Balanced decision-making
In an SBIC, the directors have the responsibility to balance the financial interests of shareholders with social and environmental interests. This long-term vision can promote more ethical and sustainable governance.
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Legal flexibility
In Spain, an SBIC can take various legal forms, such as a Sociedad Anónima (SA) (Public Limited Company) or a Sociedad de Responsabilidad Limitada (SL) (Limited Liability Company), as long as it complies with the requirements set out by law.
Benefits of setting up an SBIC
Opting for an SBIC offers a number of reputational advantages:
- Improve reputation and trust: Consumers are increasingly interested in supporting companies that promote social and environmental well-being. Setting up as an SBIC can enhance corporate image and build trust among customers, employees and investors.
- Access to conscious capital: Investors interested in ethical and sustainable projects may be attracted to SBICs as they seek to invest in companies that have a positive impact.
- Attract and retain talent: Employees increasingly value working in organisations that share their values. An SBIC can attract committed and motivated talent.
However, as in France and Italy, no financial incentive or tax advantage has yet been offered to these companies.
Steps for setting up an SBIC in Spain
In order to incorporate an SBIC in Spain, a specific process must be followed which combines the traditional steps for the creation of a company with the additional requirements for this type of entity. The main steps are described below:
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Choosing the legal structure
The first step is to choose the legal structure of the company. As mentioned above, an SBIC can take the form of a Public Limited Company (SA) or a Limited Liability Company (SL). The choice will depend on the requirements of the project.
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Drafting the Articles of Association
The Articles of Association of an SBIC should reflect its dual commitment: the company will pursue economic profit, but it is also committed to having a positive impact on society and the environment. These principles must be clearly defined in order for the company to be recognised as an SBIC.
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Registration in the Commercial Register
Once the Articles of Association have been drafted, the next step is to register the company in the Commercial Register as an SBIC. This registration formalises the incorporation of the company and ensures its legal recognition.
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Appointment of the commission or officer in charge of the purpose
The SBIC shall establish a commission or a single person in charge of overseeing the development of the common benefit purpose.
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Submission of the annual impact report
Once incorporated, the SBIC must submit an annual report detailing the social and environmental impact of its activities. It should include the specific business activities undertaken to achieve the common benefit purpose, the results and impact achieved, the objectives set for the development of this purpose and the policy on responsible and sustainable performance at environmental, social and governance levels.
Consultancy for setting up companies
Are you interested in setting up a benefit and common interest company?
Benefit and Common Interest Companies offer a business model that combines economic profit with positive impact on society and the environment. Incorporating an SBIC in Spain is a process that requires a clear commitment to sustainability and social responsibility, but also offers benefits such as increased consumer confidence and better relationships with investors and employees.
If you are interested in setting up a company that, in addition to being profitable, contributes to improving the world around it, contact Maria Teresa, our expert corporate lawyer, and we will help you to make it happen:
Are you interested in setting up a Benefit Corporation in another country? Perhaps one of the professionals of the Aliant global network of lawyers, of which we have the great pleasure of being a part, can help you. Click here for more information.