SB 298

This bill creates a category of business corporation identified as a benefit

corporation. A benefit corporation may also fall within other categories of business

corporations, such as service corporations or statutory close corporations.

Under the bill, a benefit corporation may be created by including in the articles

of incorporation at the time of formation, or by later amending the articles of

incorporation to include, a statement that the corporation is a benefit corporation.

A business corporation's status as a benefit corporation may be terminated by

amending the articles of incorporation to delete this statement.

A benefit corporation must have a purpose of creating general public benefit

and the benefit corporation may also specify in its articles of incorporation additional

specific public benefit purposes. A “general public benefit" is defined as a material

positive impact on society and the environment by the operations of a benefit

corporation taken as a whole, through activities that promote some combination of

specific public benefits. Examples of “specific public benefit" include all of the

following: 1) providing low-income or underserved individuals or communities with

beneficial products or services; 2) promoting economic opportunity for individuals or

communities beyond the creation of jobs in the normal course of business; 3)

preserving the environment; 4) improving human health; 5) promoting the arts,

sciences, or advancement of knowledge; 6) increasing the flow of capital to entities

with a public benefit purpose; and 7) the accomplishment of any other particular

benefit for society or the environment.

The board of directors of a benefit corporation must include one director

designated as the “benefit director." Notwithstanding provisions of the business

corporation law, the board of directors, committees of the board, and individual

directors of a benefit corporation, in considering the best interests of the benefit

corporation, must consider the effects of any action or inaction on all of the following:

1) the shareholders of the benefit corporation; 2) the employees and workforce of the

benefit corporation and its subsidiaries and suppliers; 3) the interests of customers

as beneficiaries of the general public benefit or specific public benefit purposes of the

benefit corporation; 4) community and societal factors, including those of any

community in which offices or facilities of the benefit corporation or its subsidiaries

or suppliers are located; 5) the local and global environment; 6) the short-term and

long-term interests of the benefit corporation, including benefits that may accrue to

the benefit corporation from its long-term plans and the possibility that these

interests may be best served by the continued independence of the benefit

corporation; and 7) the ability of the benefit corporation to accomplish its general

public benefit purpose and any specific public benefit purpose. In addition, the

board, committees, and individual directors may consider the resources, intent, and

conduct of any person seeking to acquire control of the benefit corporation and any

other pertinent factors or the interests of any other group.