This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
A common 2026 pattern looks like this: a venture-backed Delaware corporation, a few years past its seed round, decides the mission belongs in the charter and not just on the careers page. Maybe a lead investor asked for it. Maybe a strategic customer will only sign with a public benefit corporation. Maybe the founders watched the largest AI labs adopt the form and concluded it costs nothing to follow. The board asks counsel one question: how hard is this? The answer has two halves. The statutory half became easy in 2020. The contractual half is where conversions actually stall.
The 2020 amendments took the special vote off the table
When Delaware enacted Subchapter XV in 2013, converting an existing corporation into a PBC required the approval of ninety percent of the outstanding shares of every class, voting or not, and dissenting stockholders got appraisal rights. That was a deliberate speed bump. The 2015 amendments cut the vote to two-thirds. The 2020 amendments, 82 Del. Laws c. 256, removed the special vote and the appraisal remedy entirely. What is left of DGCL 搂 363 is a single sentence barring a nonprofit nonstock corporation from merging into a PBC. Everything else now runs through the ordinary charter-amendment machinery of 搂 242.
The practical consequence is that a PBC conversion is approved the same way any other charter amendment is approved: a majority of the outstanding stock entitled to vote, plus any class vote 搂 242(b)(2) or the charter itself requires. The exit is symmetric: a PBC can drop the designation by the same majority amendment. Boards that remember the supermajority era sometimes still model the conversion as a near-unanimous event. It has not been one for six years.
What the amendment has to say
DGCL 搂 362(a) asks for two things. The heading of the certificate of incorporation must state that the corporation is a public benefit corporation, and the purpose clause under 搂 102(a)(3) must identify one or more specific public benefits the corporation will promote. Section 362(b) defines a public benefit broadly: a positive effect, or a reduction of negative effects, on one or more categories of persons, entities, communities, or interests other than stockholders as stockholders, and it lists artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific, and technological effects as examples.
The drafting decision that matters is how the specific benefit is worded. Too narrow and the board is stuck balancing against a mission the business has outgrown; changing it later is another 搂 242 amendment with another stockholder vote. Too vague and it invites the argument that the corporation identified nothing specific at all. The middle path most drafters take is a purpose tied to the company’s actual line of business, phrased at the level of the outcome rather than the product, with a catch-all reference to operating in a responsible and sustainable manner. Whatever the language, it should be something the board can honestly report against every two years, because 搂 366 will require exactly that.
Mechanically the process is 搂 242(b)(1): the board adopts a resolution setting forth the amendment, declares it advisable, and either calls a meeting or, in a private company, circulates a written consent under 搂 228. If the vote is taken by consent, remember the 搂 228(e) notice to non-consenting stockholders, which is the same notice window that quietly governs closing timing in a sale. Then a certificate of amendment goes to the Delaware Secretary of State and is effective on filing unless a later effective time is specified. A merger into an existing PBC on the ordinary 搂 251 vote is the alternative route, rarely worth the complexity for a company that can simply amend.
Names, certificates, and the notices nobody remembers
Adding “PBC” or “Public Benefit Corporation” to the corporate name is optional under 搂 362(c). If the name does not signal PBC status, the corporation must tell every person to whom it issues stock that it is a public benefit corporation before the issuance, with exceptions for offerings registered under the Securities Act and for corporations with a class registered under the Exchange Act. Most private companies find it easier to change the name than to police the notice. Since 2023, 搂 242(d)(1) has generally allowed a board to adopt a standalone name-change amendment without a stockholder vote unless the charter requires one, but the PBC amendment itself always needs the vote, so in practice both changes usually ride together in one certificate of amendment.
Two smaller items follow. Under 搂 364, stock certificates, and 搂 151(f) notices for uncertificated shares, must state conspicuously that the corporation is a public benefit corporation. Under 搂 366(a), every notice of a stockholder meeting must say the same. Both get missed when the conversion is treated as a filing rather than a change to the company’s paperwork.
Where conversions actually stall
The statutory vote is the floor, and it is almost never the binding constraint. In a venture-backed company the preferred stock protective provisions will require the consent of the requisite preferred holders to any charter amendment, and many forms require it for any amendment at all rather than only adverse ones. That consent is the second approval founders forget they granted, and it is a negotiation, not a formality. Investors ask reasonable questions: what does the balancing duty do to the board’s posture in a sale, will a later acquirer discount for it, and does the fund’s own mandate permit holding a PBC. Investor rights agreements and side letters sometimes add separate consent rights over changes to the nature of the business. Credit agreements often treat a change to the borrower’s organizational documents as a covenant matter, and material commercial contracts occasionally do the same. If the corporation is public, the conversion is a proxy item with disclosure to draft and a proxy-advisor conversation to have; Veeva Systems ran that process in 2021 and became the first listed company to convert by stockholder vote.
The practical rule is simple. Read the charter, the investor agreements, the debt documents, and the top ten customer contracts for any consent or notice triggered by a charter amendment or a change in corporate purpose before the board resolution is drafted, not after.
What the company signs up for, and what Drakes Landing just clarified
Post-conversion, 搂 365(a) requires the board to manage the corporation in a manner that balances the pecuniary interests of stockholders, the best interests of those materially affected by the corporation’s conduct, and the specific public benefit in the charter. Section 365(b) provides that directors owe no duty to the beneficiaries of the public benefit and are deemed to satisfy their fiduciary duties on a balancing decision if the decision is informed, disinterested, and not such that no person of ordinary, sound judgment would approve. Section 365(c), as revised in 2020, provides that stock ownership alone does not make a director conflicted on a balancing decision, and that absent a conflict, a failure to balance is not bad faith or disloyalty for exculpation and indemnification purposes unless the charter says otherwise. Section 366(b) requires a statement to stockholders at least every two years covering the board’s objectives, the standards it uses to measure progress, objective factual information, and an assessment. Section 367 requires plaintiffs suing to enforce the balancing requirement to hold at least two percent of the outstanding shares, or for listed companies the lesser of two percent or two million dollars in market value.
Until this summer, that framework had never been applied by a Delaware court. On July 29, 2026, Vice Chancellor Cook issued the Court of Chancery’s first decision addressing PBCs in Drakes Landing Associates, L.P. v. Tilden Park Capital Management, L.P., C.A. No. 2025-0898-NAC. Stockholders of MPower Financing, PBC challenged a rescue financing with existing lenders that would heavily dilute them on conversion. The court held that Revlon‘s stockholder-value-maximization mandate cannot serve as the standard of conduct for PBC directors, because telling a board it must focus on sale price would be irreconcilable with the statutory command to balance other interests against it. The court then applied the 搂 365(b) safe harbor and dismissed the complaint, including the aiding-and-abetting claims against the funds, on the ground that the safe harbor deems the duty satisfied rather than merely limiting the remedy. Two lessons for a board considering conversion follow directly. First, the safe harbor is real, but the court noted PBC directors must inform themselves as to all three 搂 365(a) interests, so the minutes need to show that the board actually considered the stakeholders and the public benefit and not just the price. Second, the court left open whether some modified form of enhanced scrutiny applies to PBCs, so a conversion does not end process discipline in a sale; it changes what the process has to document. Readers who followed the discussion of why Florida corporations have no Revlon duty will recognize the theme: the standard of conduct changes, and careful process still wins.
The Florida angle
Most Florida founders reading this have Delaware corporations, so the analysis above is theirs. A Florida corporation faces a stiffer road. Florida’s benefit corporation statute, Fla. Stat. 搂搂 607.601 to 607.613, lets an existing corporation elect benefit status by amending its articles, but 搂 607.604 requires the amendment to be adopted by the “minimum status vote,” which 搂 607.602 defines as two-thirds of the votes of each class or series of shares, each voting as a separate voting group regardless of what the articles say about voting, and the election triggers appraisal rights under 搂搂 607.1301 to 607.1340. Florida also offers a social purpose corporation form under 搂搂 607.501 to 607.513 with the same vote. Delaware, in other words, now makes the conversion easier than Florida does, which is one more reason the Delaware charter tends to be the one that gets amended when a Florida-based company decides the mission belongs in the governing document. For a broader treatment of what the PBC form is meant to do, this earlier post covers the concept; the current text of Subchapter XV is at .
The conversion is a majority vote and a one-page filing. The work is the consents in the drawer and the balancing record the board keeps afterward.
If you are weighing whether to move a Delaware corporation onto the public benefit corporation form, or trying to figure out which consents the conversion actually needs, feel free to reach out to our firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
