Meeting the legal requirement
To certify as a B Corp, you will be required to make a commitment to consider your company’s impact on its stakeholders, now and in the future, by building it into your legal structure. Find out more about the legal requirement below.
What is the B Corp Legal Requirement?
The B Corp Legal Requirement formalises your company’s alignment with the B Corp Movement’s values and embeds a stakeholder-focused mindset that separates B Corps from other businesses.
The B Corp Legal Requirement is designed to:
- Provide a legal basis to allow directors to consider the interests of all stakeholders, not just shareholders, when making important decisions
- Protect the company’s mission and values through capital raises and leadership changes, and give business leaders more flexibility when evaluating sale and liquidity options
Is it a requirement of every business looking to certify as a B Corp?
Yes. The B Corp Legal Requirement is a fundamental element of certification.
All companies seeking to become a B Corp must meet the B Corp Legal Requirement and update their Articles of Association to include mission-aligned legal language. To find the legal language for your company please read the guidance here.
Making the legal change prior to certification is required for all companies with 0-49 full time employees. For businesses with more than 50 employees, additional time is granted depending on the company’s legal structure – limited companies will have up to a year after certification to complete the legal change, and Limited Liability Partnerships (LLPs) will have 90 days.
A company is awarded Mission Lock points on the B Impact Assessment for making the legal change. To earn the full 7.5 or 10 points available on this question, the legal requirement must be completed during the B Corp Certification process.
How do I meet the legal requirement?
(See below for a 5 step guide)
If you are a limited company, you will need to amend your Articles of Association to include the specific B Corp Legal Requirement wording, which should be adopted verbatim. This legally commits you to use business as a force for good, by:
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Creating a material positive impact on society and the environment through your business and operations
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Considering ‘stakeholder interests’ – including your shareholders, employees, suppliers, society and the environment
Once amended, your company’s constitutional documents will be filed with Companies House.
The relevant wording for Limited Companies, Community Interest Companies (CICs) Limited by Shares, Companies Limited by Guarantee (CLGs), Limited Liability Partnerships (LLPs) can be found here. Specific wording is also available for Building Societies and Cooperatives, please contact certification@bcorporation.uk directly to access these.
5 steps to make the legal requirement
Helping you gain a high-level understanding of the procedure for your company for making the B Corp legal change.
- The Board of Directors reviews legal requirement. The company considers how the legal requirement fits with current constitutional documents (including shareholders agreement, if any) and board members discuss the process and timetable for amendments to be made.
- Internal stakeholders engaged. The Board of Directors circulate the legal requirement language to internal stakeholders e.g. shareholders/members, legal counsel, audit committee, investment committee, risk committee - for review and feedback (possibly through an internal B Corp champion).
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The board approves legal change. Legal requirement language is approved at a meeting of the Board of Directors, which resolves to convene a shareholders’ general meeting or propose a written resolution.
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Shareholder/member special resolution to approve amendment to articles. Subject to any further requirements in the Articles of Association, a special resolution passed by at least a 75% shareholder majority is required to approve amendments to the constitution. Either passed by way of a written resolution (for private companies) or a resolution at general meeting.
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File documentation with Companies House. Documents to be filed with Companies House include Form CC04, amended Articles of Association and a copy of the special resolution. Follow this link to file documents with Companies House - https://www.gov.uk/file-changes-to-a-company-with-companies-house. Documents must be filed with Companies House within 15 days of passing shareholders’ resolution.
NB This guide is illustrated for a limited company, so each organisation should consider the requirements specific to its legal form, in determining its process for making a constitutional amendment. Organisations may want to consider seeking legal advice to assist with this process.
Further resources
Download the detailed guide to meeting the legal requirement
To meet the legal requirement, companies must adopt specific wording that is supplied by B Lab. Find the correct wording for your company structure here.
Download a guide to embracing stakeholder governance - this contains helpful information for Boards and Investors.
The legal requirement will differ across countries. To find out more about the legal requirement outside of the UK, visit our global site and use our Legal Requirement tool.
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Where in my company’s governing documents should the legal text be inserted?
Company governing documents / Articles of Association can vary in structure and content, therefore there is not one particular section where you must apply the B Corp legal wording. Some companies insert the wording under Director’s Duties, or Company Objects, or at the end of their Articles. If the business’ constitution already has a ‘purposes’ or ‘objects’ clause, B Lab requires at least paragraph (1) of the UK Legal Requirement to be incorporated into that clause.
The important thing is that the text is adopted verbatim based on the legal structure of your company.
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My business has the previous version of the language in its constitution, what should I do?
Updates were made to the UK B Corp Legal Requirement in 2024. The updates made to the UK B Corp Legal Requirement wording do not change their legal meaning. They aim to streamline the language, make it easier to read and use, and improve consistency between versions of the Legal Requirement for different legal structures.
If your business is certifying for the first time, you must ensure that you adopt the current, 2024 version of the UK B Corp Legal Requirement wording, which can be found in this document.
If a business has a previous version of the UK Legal Requirement wording in its constitution, this will not prohibit recertification. However, when a certified B Corp business next updates its constitution, B Lab UK strongly encourages the business to update the UK Legal Requirement wording in its constitution to the 2024 version.
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Can I change the wording of the legal requirement?
We strongly advise incorporating the wording verbatim. Companies that do not think they can adopt the legal path as outlined may provide B Lab with a written letter from an attorney that explains why they are unable to meet the legal requirement, and may include alternative solutions. This will then be reviewed and either accepted or rejected by B Lab’s Certification & Verification Team and Legal Committee. However, this may result in a longer overall timeline to certification.
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What is impact reporting and what does the UK B Corp Legal Requirement say about impacting reporting?
As outlined in paragraph 5 of the UK B Corp Legal Requirement, the business is required to prepare an impact report and circulate this to the members.
The impact report must provide a balanced and comprehensive analysis of the impact the Company’s business has had, with enough detail to enable the members to understand how the business has worked to further its purposes, in a manner proportionate to the size and complexity of the business.
For more detailed guidance, please refer to our Writing a B Corp Impact Report guide.
Although the UK Legal Requirement only requires the impact report to be circulated to the business’ members, the report should be made available to all of the company’s stakeholders. This includes internal stakeholders (staff, directors, board members) as well as your wider audience (customers, partners and suppliers). B Lab UK encourages B Corps to publish annual Impact Reports on the company’s website, supporting greater stakeholder transparency.
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Can I meet the legal requirement if I am a sole trader?
Sole traders are eligible to become B Corps, however they are not able to meet the B Corp Legal Requirement as they do not have governing documents / Articles of Association. If you are a sole trader, you should select Option 1 in the Mission Lock question, worth 2.5 points.
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Does the UK B Corp Legal Requirement restrict the activities that the business can carry out?
The UK B Corp Legal Requirement does not define the activities that the business carries out. Instead, it sets out that the business will work to create a positive impact on people and the planet through its business activities and enables the board to weigh up different stakeholder interests without being obligated to, ultimately, give priority to the interests of members (shareholders) in its decision-making.
