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.
Sample language to certify after closing
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.
Sample language to maintain certification
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.