20 Connecticut Social Entrepreneurs Convert Their Companies to Benefit Corporations
A lifestyle coffee company was one of 20 companies Wednesday to switch their corporate structure over to a Benefit Corporation.
A Happy Life’s founder Vishal Patel and Onyeka Obiocha, its chief financial officer, have been waiting for this day since March 2013 when they were forced to incorporate as an LLC because the state previously didn’t offer Benefit Corporation as a designation.
This year the General Assembly passed legislation approving Benefit Corporation legislation as part of the state budget and Wednesday was the first day a company could choose that designation. The designation doesn’t necessarily give the company a tax advantage, but it allows a corporation to earn a profit and operate a social enterprise with the blessing of its shareholders.
Kate Emery, who has been called the “godmother” of Connecticut social enterprise movement, said the legislation Connecticut approved is the “most comprehensive” and has social entrepreneurs from other states looking to register their businesses here in Connecticut.
Connecticut is unique because it allows for a preservation clause that ensures shareholders that a company can’t flip back to a regular corporation with a majority vote of the shareholders.
“That’s something Connecticut has that no other state has,” Emery said. “I think that’s something we can use to attract other businesses to Connecticut.”
There are currently 23 other states with Benefit Corporation designations.
With over 20 companies to register in Connecticut on the very first day, “if we’re not the highest in the nation, we’re certainly per capita the state with the most social entrepreneurs who have registered on the first day,” Emery said.
“I think that sends out a huge message to world,” she added from a podium in the shared office space in Hartford that her benefit corporation helped establish.
Secretary of the State Denise Merrill said some of the companies that registered Wednesday are from other states and wanted to incorporate in Connecticut “because the law is so great and comprehensive.”
Merrill said her job is make sure it’s easy to register in Connecticut with the commercial recording division. She said Connecticut will be one of the only states to include the Benefit Corporation status of a company in the public record and in real time. That means the state will be able to track how many social benefit corporations choose to call Connecticut home.
State Rep. Gregg Haddad, D-Mansfield, who for many years championed the legislation, said he believes it will be “transformative” for the state of Connecticut. “Not just because we have entrepreneurs, who I think are committed to … a triple bottom line of purpose and people and profits, but also because it offers a new kind of dynamic in the state that’s going to be especially attractive to young people.”
Lt. Gov. Nancy Wyman said when she met Patel and Obiocha in January they were just starting out and she was excited to hear they have expanded.
Patel said back in January their coffee was only in a few locations, but they’re now in more than 40 stores, coffee shops, and restaurants. Its coffee comes from underserved countries like Bolivia, Costa Rica, and Tanzania and most of the profits from the sale of the coffee go back to coffee growers in these communities.
A Happy Life will also be opening up its own coffee shop in New Haven in Ninth Square on Chapel Street near The Grove, which is a shared workspace similar to the reSet offices in Hartford.
“This is exactly the kinds of corporations and businesses that we need here,” Wyman said.