For the public good

Private schools business Curro will be transitioning from a listed company to a public benefit organisation (PBO) under the auspices of the Jannie Mouton Foundation (JMF) after the recent takeover approach by the JMF. However, if it were listed in the US, it could possibly remain listed through a new corporate structure, known as a public benefit corporation (PBC), under which some recent IPOs in the US have chosen to list and operate.

PBCs are a relatively new corporate structure which has emerged over the past few years in the US. Under the legislation, a company, which can be a private or public entity, is legally mandated to balance profits with social benefits and is legally required to ensure its governance practices and reporting to shareholders and stakeholders reflect this dual purpose. Examples of companies that have adopted this corporate structure, as enshrined in Delaware state law, are Coursera and Warby Parker.

The IPO prospectus from Warby Parker states: “As a public benefit corporation, we are required to balance the financial interests of our stockholders, the best interests of those stakeholders materially affected by our conduct, and the specific benefit purposes set forth in our amended charter. Accordingly, our duty to balance a variety of interests may result in actions that do not maximise stockholder value.”

Crucially, PBC legislation offers protection to company directors from shareholder lawsuits if they make decisions that benefit the company’s wider stakeholders at the expense of short-term shareholder value. Thus, if a PBC structure existed in South Africa, it could be utilised by listed counters on the JSE, and Curro could perhaps remain on the boards. The existence of such a structure could open the door to other companies that wish to list without compromising their social-good aspirations and credentials, which they feel may be diluted by a public listing and the requirement to act in the best interest of shareholders.

The youth of today are the investors of tomorrow, and their collective consumer spending power and investment funds might shift more companies into a PBC structure

The PBC structure is a relatively new concept and time will tell if it will be a success. It is certainly innovative and takes ESG commitments to a new level. To date, ESG investors have relied on mandatory reports imposed through exchange listing rules or government regulations to assess a company’s ESG commitment and impact.

Under the PBC structure, the company continues to comply with existing legislation and listing rules while also committing to reporting on its own self-imposed social impact, as outlined in its founding legal documents. The PBC, through its corporate documents, legally compels directors to exercise governance oversight that aligns with its social charter. This is a more comprehensive approach than the legally required ESG compliance reporting, as it is embedded in the company’s core governance mandate, making it central to the board’s operations rather than a specific function of the board.

Before the PBC structure was established, investors seeking companies that made a serious commitment to ESG principles could look to independent certifications or awards for evidence of social commitments. Many companies, both listed and unlisted, have sought B-Corp certification to demonstrate their ESG credentials.

B-Corp certification evaluates a company’s performance in areas such as social impact, environmental practices and governance, which generally exceed legally mandated minimum requirements. Classic examples of B Corps include Ben & Jerry’s and Innocent Drinks, as well as local B Corp-certified examples such as Lubanzi Wines, Sealand Gear and Faithful to Nature. Warby Parker is also a B Corp-certified company, in addition to being a PBC. The key difference is that the latter is legally binding while the former, though widely recognised as a mark of ESG excellence, is ultimately voluntary for the company.

ESG investing is out of favour under the Trump administration’s worldview. Still, anyone who regularly speaks to the youth in our society knows that the next generation is far more attuned to companies’ broader goals and missions, as well as their impact on society. The youth of today are the investors of tomorrow, and their collective consumer spending power and investment funds might shift more companies into a PBC structure. As always, the market will respond to the demands of its participants, and boards will seriously consider adopting PBC-style structures if they see their competitors’ stock prices benefiting from it. 

For now, however, given that a PBC as a legal corporate structure does not exist in South Africa, the JSE and South African investors will have to bid farewell to yet another listing in early 2026.