Entrepreneurs and investors may agree that a Company’s overall social and environmental performance be assessed and certified according to a recognized third-party standard. Companies with a B Corp certification, for example, must measure their performance against a set of standards set by the nonprofit B Lab.
If the company has not yet been certified by a third-party at the time of investment, investors and entrepreneurs may agree that the company will certify within a certain period of time after investment. If the company is certified at the time of investment, the founders may ask that investors commit to supporting the certification over time.
- Certification after deal closing
Sample language: The Company shall seek to achieve certified B Corporation status within [time period] after the Closing, and shall maintain that status for as long as the Investors hold at least X percent of the Shares purchased during the term of the Loan.
- Maintaining Certification
Sample language: The Investors acknowledge that the Company is a certified B Corporation, and to the extent possible under law, shall act in conformity with the Term Sheet for Certified B Corporations that the Company has entered into with B Lab. The Investors shall agree to take any actions reasonably proposed by the Board in order to meet the requirements of and to continue to operate as a B Corporation.