Haskell Murray, Author at socentlaw - Page 4 of 6


Massachusetts Institute of Technology (“MIT”) and edX are offering a free online economic course focused on the challenges of global poverty.  The course starts this week and those who complete the course, which ends May 24, 2013, will receive a certificate.  The course is available here: https://www.edx.org/courses/MITx/14.73x/2013_Spring/about

The course description is:

“This is a course for those who are interested in the challenge posed by massive and persistent world poverty, and are hopeful that economists might have something useful to say about this challenge. The questions we will take up include: Is extreme poverty a thing of the past? What is economic life like when living under a dollar per day? Are the poor always hungry? How do we make schools work for poor citizens? How do we deal with the disease burden? Is microfinance invaluable or overrated? Without property rights, is life destined to be “nasty, brutish and short”? Should we leave economic development to the market? Should we leave economic development to non-governmental organizations (NGOs)? Does foreign aid help or hinder? Where is the best place to intervene? And many others. At the end of this course, you should have a good sense of the key questions asked by scholars interested in poverty today, and hopefully a few answers as well.”

The course is taught by MIT economics professors Abhijit Vinayak Banerjee and Esther Duflo.

I am about halfway through the first week’s material and am enjoying it.



In my Google Alert e-mail from yesterday were two stories about universities receiving millions of dollars to support social enterprise initiatives.

Technology entrepreneur James Lee Sorenson donated $13 million to the University of Utah’s business school to establish the James Lee Sorenson Center for Global Impact Investing.  The story from Reuters is here.

Also, John Edwardson, a retired CDW Chairman and Chief Executive, donated $5 million to the University of Chicago’s Booth School of Business for its social enterprise initiative.  The story from the Chicago Tribune is here.

These large gifts confirm my opinion that law schools are lagging behind business schools in the social enterprise/social entrepreneurship/impact investing space.  Thanks to a number of law professors, however, many of whom contribute to this blog, law schools are starting to gain some ground.



Jonathan Ng, the Global Legal Director for Ashoka, recently sent me information about a webinar that Morrison & Foerster, Jones Day, and Adler & Colvin are putting on specifically for Ashoka staff, Ashoka Fellows, and Ashoka’s contacts and partners.  Jonathan said I could post information about the webinar on this blog.  You must preregister for the webinar here.

The speakers include:  Susan H. Mac Cormac (Partner, Morrison & Foerster) R. Todd Johnson (Partner, Jones Day); David Levitt (Principal, Adler & Colvin).

The webinar is described as “a workshop on legal ‘hybrid’ structures – where social, environmental, and economic missions are embedded in one or more legal forms. . . . [The presenters will] provide detail on important corporate, governance, and tax issues – as well as operational challenges – and discuss how the various models may or may not be effective in maximizing social and environmental goals through company operations.”


Professor Cass Brewer (Georgia State Law) recently posted a draft of his article, Seven Ways to Strengthen and Improve the L3C.  His article was prepared for Regent University School of Law’s Symposium on Emerging Issues in Social Enterprise.

While Professor Brewer recognizes that the L3C is flawed in its current form, he does not stop there.  Professor Brewer should be commended for exploring and proposing creative, potential solutions.

The abstract of the paper is as follows, and the entire article is well worth your time:

The raison d’être for the low-profit limited liability company (“L3C”) is to encourage program-related investments (“PRIs”) by private foundations. PRIs are special types of investments that can be both charitable and profitable. PRIs have been embraced by knowledgeable scholars, practitioners, foundation managers, and even the U.S. Treasury Department. Further, the L3C and PRIs are associated with the growing “social enterprise” movement. The L3C thus would seem to be in the right place at the right time and should have the full support of the charitable sector, practitioners, and lawmakers.

Yet, after a fast start, adoption of L3C legislation across the U.S. has stalled. In fact, several states recently have considered L3C legislation and have either rejected it outright or deferred its passage indefinitely. Many highly-regarded scholars and practitioners adamantly oppose the L3C, even though those scholars and practitioners generally endorse PRIs. This slow pattern of adoption and strong opposition to the L3C contrasts sharply with the rapidly increasing acceptance of another type of “social enterprise” entity, the benefit corporation.

Why is L3C legislation languishing? Because the L3C suffers from the following fundamental defects: (i) except in name, the L3C is indistinguishable from a regular LLC; (ii) without any type of statutory enforcement mechanism, the L3C lacks accountability and transparency; and (ii) because the L3C promises more than it can deliver absent new federal legislation, the L3C fails of its essential purpose of encouraging PRIs. Given these defects, the L3C’s opponents maintain that the L3C is a well-intentioned but nonetheless failed experiment that should be abandoned.

This article argues that even though the L3C in its current form is defective, the L3C should not be abandoned. Instead, the L3C can be a viable tool for tax-exempt organizations and PRIs if the current statutory framework is strengthened and improved. With the foregoing premise in mind, this article proposes seven relatively simple but impactful changes that would strengthen and improve the L3C statutory framework. If the L3C becomes more than just a brand, then perhaps the L3C can fulfill its raison d’être.



At the upcoming Association of American Law Schools (“AALS”) Annual Meeting, the Nonprofit and Philanthory Law Section is hosting a panel dedicated to legal issues related to social enterprise. 

The panel will take place from 4:00 p.m. until 5:45 p.m. in the Windsor conference room on the third floor of the Hilton New Orleans Riverside.

Dana Brakman Reiser (Brooklyn) will serve as moderator and the panelists will present papers (on the topics listed) in the following order.

Melanie Leslie (Cardozo) –  proposing a joint venture-based framework for social enterprises

Haskell Murray (Regent) – jurisidictional competion and social enterprise

Richard Schmalbeck (Duke) – tax law and social enterprise

Cass Brewer (Georgia State) – also discussing tax law and social enterprise

Alicia Plerhoples (Georgetown) –  pedagogy, focused on teaching social enterprise

I am looking forward to the panel, and I am glad that Dana has organized this group to discuss a number of the legal issues in this emerging space. 




The Massachusetts benefit corporation statute went effective today.

I have updated my benefit corporation statute chart to include Massachusetts’ substantive provisions.  The updated chart is posted on SSRN and is available for free download here.

Two provisions that set the Massachusetts benefit corporation statute apart from most of the other states relate to (1) the appraisal rights for minority shareholders when converting from a traditional corporation to a benefit corporation by amendment of the articles or by merger and (2) the prohibition on holding your organization out as a benefit corporation if your organization is not in full compliance with the statute.

Appraisal/Dissenters’ Rights.

Currently, California’s and South Carolina’s benefit corporation statute are the only active benefit corporation statutes, other than Massachusetts, that expressly provide for appraisal/dissenters’ rights.  California and South Carolina call these rights “dissenters’ rights” and Massachusetts calls them “appraisal rights” but they operate similarly.  In my Choose Your Own Master article I approve of the California dissenters’ rights provision, even though the Benefit Corporation White Paper explains that the Model Legislation chose not to create dissenters’ rights in the benefit corporation context (pages 26-27).  The authors of the Benefit Corporation White Paper argue that dissenters’ rights may be inappropriate because becoming a benefit corporation is not usually a liquidity event, and benefit corporations may be “cash-poor” and unable to pay dissenters.  While many benefit corporations may be “cash-poor,” I think that becoming a benefit corporation is such a fundamental change that dissenting minority shareholders should be provided a reasonable exit in all states.  If the change in form is a good thing the corporation should be able to find new money to replace the dissenters.

I am glad to see Massachusetts joining California and South Carolina by providing appraisal/dissenters’ rights in its benefit corporation statute.  Interestingly, however, the Massachusetts and South Carolina statutes only expressly apply when the a traditional corporation converts to a benefit corporation, but not when a benefit corporation converts to a traditional corporation.  I would require appraisal rights in both instances (as California does), because converting out of the benefit corporation form could be just as important to certain shareholders as converting into the form.

Comply Fully with the Statute or Do Not Hold Out as a Benefit Corporation.

Massachusetts appears to be the only active benefit corporation statute to expressly state that a business organization “shall not hold itself out as, advertise as, or indicate in any way that it is a benefit corporation unless it was organized under and in full compliance with [the benefit corporation statute].”  This provision could prove important in dealing with benefit corporations that do not file their annual benefit report or otherwise violate the statute.  Based on my preliminary research, a number of benefit corporations have failed to make available their annual benefit reports in the required time period (usually 120 days after the end of their fiscal year) or have published a annual benefit report that does not comply with the statutory requirements.  Unfortunately, most states do not have an enforcement mechanism related to the annual benefit corporation report requirements.  New Jersey is an exception and states that a benefit corporation will lose its status if it does not file a benefit report for two years.  This Massachusetts provision would impact the benefit corporation immediately (instead of after two years), but it does not describe the consequences if a benefit corporation does hold itself out as a benefit corporation while it is out of compliance with the statute.

As always, please feel free to contact me with any comments.

Updated:  Thanks to an e-mail from Suffolk law student Kate Acello, this post has been updated to add South Carolina to the states offering appraisal/dissenters’ rights.  Also, on 3/20/13 I posted on the proposed amendments to the Delaware General Corporate Law, which deal with “public benefit corporations” and include appraisal rights.


A few weeks ago, we mentioned the L3C & the Arts event.

Recently, a video of the event was posted online and is available here.


Yesterday, The Boston Globe published an article on benefit corporations by Ben Schreckinger entitled “Virtue Inc.”  Read the entire article for yourself, but I just wanted to point out two things about the article.

First, Boston College Law School Professor Kent Greenfield provides quotes near the end of the article.  This was interesting to me because the quotes show that benefit corporations are starting to get the attention of some of the top thinkers in the legal academy.  (Professor Greenfield is the author of The Failure of Corporate Law: Fundamental Flaws and Progressive Possibilities, among other works).

Second, Professor Greenfield expressed concern that “opt-in solutions like benefit corporations risk diverting momentum from bigger reform efforts that could affect the way all corporations do business.”  While there has definitely been a fair bit of change brought on by the broader corporate social responsibility movement over the past few decades, much of that change appears to be fairly surface level, at least in the United States.  It still remains to be seen whether benefit corporations will be more successful in making large-scale and core changes in what Professor Greenfield refers to as the harmful “narrow focus on shareholder interest.”


While only tangentially related to social enterprise law, I thought some of our readers might be interested in the 2012 SEC Government-Business Forum on Small Business Capital Formation.  Many social enterprises are small businesses, and most social enterprises are, obviously, interested in capital formation.   

The SEC website describes the program as: “includ[ing] two morning panel discussions. The first panel will focus on JOBS Act implementation and the second panel will focus on small business capital formation issues not addressed by the JOBS Act. In the afternoon, breakout groups will develop recommendations on a variety of issues related to small business capital formation.”

The speakers include the SEC Commissioners, various leading practitioners, and one academic with an extremely impressive CV (Professor Robert Barlett of UC Berkeley School of Law).

The program lasts from 9:00 a.m. until 5:00 p.m. and finishes with a networking receptions.

You can pre-register here.


My conflict on November 16 is the fall meeting of the American Bar Association’s Business Law Section at the Ritz-Carlton in Washington, D.C.

Steven Haas, a partner at Hunton & Williams in Richmond, VA, asked me to pull a few speakers together for a Corporate Governance Committee slot at the meeting.

The topic is “Emerging Issues in Benefit Corporation Law and Practice.”  Our topic will take the floor from 9:00 a.m. until 10:00 a.m.  The speakers will be Alicia Plerhoples (Georgetown Law), Jon Widrick (Ascensus Law Group), and me (Regent Law).  All three of us have joined the socentlaw.com team and I just announced Jon’s addition today.

Please join us in D.C. if you can.