| |
|
| |
| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
| |
| HOUSE BILL |
|
| |
| |
| INTRODUCED BY DENLINGER, DePASQUALE, CUTLER, BLOOM, BOYD, BRIGGS, COHEN, CREIGHTON, DALEY, FLECK, GABLER, GEIST, GROVE, HICKERNELL, KILLION, LONGIETTI, MILNE, MURT, PYLE, RAPP, SWANGER AND WAGNER, JUNE 2, 2011 |
| |
| |
| REFERRED TO COMMITTEE ON JUDICIARY, JUNE 2, 2011 |
| |
| |
| |
| AN ACT |
| |
1 | Amending Title 15 (Corporations and Unincorporated Associations) |
2 | of the Pennsylvania Consolidated Statutes, further providing |
3 | for benefit corporations. |
4 | The General Assembly of the Commonwealth of Pennsylvania |
5 | hereby enacts as follows: |
6 | Section 1. Article C of Subpart B of Title 15 of the |
7 | Pennsylvania Consolidated Statutes is amended by adding a |
8 | chapter to read: |
9 | CHAPTER 33 |
10 | BENEFIT CORPORATIONS |
11 | Subchapter |
12 | A. Preliminary Provisions |
13 | B. Corporate Purposes |
14 | C. Accountability |
15 | D. Transparency |
16 | SUBCHAPTER A |
17 | PRELIMINARY PROVISIONS |
|
1 | Sec. |
2 | 3301. Application and effect of chapter. |
3 | 3302. Definitions. |
4 | 3303. Formation of benefit corporations. |
5 | 3304. Election of an existing business corporation to become a |
6 | benefit corporation. |
7 | 3305. Termination of benefit corporation status. |
8 | § 3301. Application and effect of chapter. |
9 | (a) General rule.--This chapter shall apply to all benefit |
10 | corporations. |
11 | (b) Application of business corporation law generally.--The |
12 | existence of a provision of this chapter shall not of itself |
13 | create any implication that a contrary or different rule of law |
14 | is or would be applicable to a business corporation that is not |
15 | a benefit corporation. This chapter shall not affect any statute |
16 | or rule of law that is or would be applicable to a business |
17 | corporation that is not a benefit corporation. |
18 | (c) Laws applicable to benefit corporations.--Except as |
19 | otherwise provided in this chapter, this subpart shall apply |
20 | generally to benefit corporations. The specific provisions of |
21 | this chapter shall control over the general provisions of this |
22 | subpart. A benefit corporation may be simultaneously subject to |
23 | this chapter and one or more other chapters of this article. |
24 | (d) Organic records may not be inconsistent.--A provision of |
25 | the articles or bylaws of a benefit corporation may not relax, |
26 | be inconsistent with or supersede any provision of this chapter. |
27 | § 3302. Definitions. |
28 | The following words and phrases when used in this chapter |
29 | shall have the meanings given to them in this section unless the |
30 | context clearly indicates otherwise: |
|
1 | "Benefit corporation." A business corporation that has |
2 | elected to become subject to this chapter and whose status as a |
3 | benefit corporation has not been terminated as provided in this |
4 | chapter. |
5 | "Benefit director." The director designated as the benefit |
6 | director of a benefit corporation as provided in section 3322 |
7 | (relating to benefit director). |
8 | "Benefit enforcement proceeding." A claim or action brought |
9 | directly by a benefit corporation, or derivatively on behalf of |
10 | a benefit corporation, against a director or officer for: |
11 | (1) failure to pursue the general public benefit purpose |
12 | of the benefit corporation or any specific public benefit |
13 | purpose set forth in its articles; or |
14 | (2) violation of a duty or standard of conduct under |
15 | this chapter. |
16 | "Benefit officer." The officer of a benefit corporation, if |
17 | any, designated as the benefit officer as provided in section |
18 | 3324 (relating to benefit officer). |
19 | "General public benefit." A material positive impact on |
20 | society and the environment by the operations of a benefit |
21 | corporation taken as a whole, as measured by a third-party |
22 | standard, through activities that promote some combination of |
23 | specific public benefits. |
24 | "Independent." When a person has no material relationship |
25 | with a benefit corporation or any of its subsidiaries, other |
26 | than the relationship of serving as the benefit director or |
27 | benefit officer, either directly or as a shareholder, partner, |
28 | member or other owner or a director, officer or other manager of |
29 | an association that has a material relationship with the benefit |
30 | corporation or any of its subsidiaries. A material relationship |
|
1 | between an individual and a benefit corporation or any of its |
2 | subsidiaries will be conclusively presumed to exist if: |
3 | (1) the person is, or has been within the last three |
4 | years, an employee of the benefit corporation or any of its |
5 | subsidiaries, other than as a benefit officer; |
6 | (2) an immediate family member of the person is, or has |
7 | been within the last three years, an executive officer, other |
8 | than a benefit officer, of the benefit corporation or any of |
9 | its subsidiaries; or |
10 | (3) the person, or an association of which the person is |
11 | a director, officer or other manager or in which the person |
12 | owns beneficially or of record 5% or more of the outstanding |
13 | equity interests, owns beneficially or of record 5% or more |
14 | of the outstanding shares of the benefit corporation. The |
15 | percentage of ownership in an association shall be calculated |
16 | as if all outstanding rights to acquire equity interests in |
17 | the association had been exercised. |
18 | "Minimum status vote." When in addition to any other |
19 | approval or vote required by this subpart or a bylaw adopted by |
20 | the shareholders: |
21 | (1) The holders of shares of every class or series shall |
22 | be entitled to vote on the corporate action regardless of any |
23 | limitation stated in the articles of incorporation or bylaws |
24 | on the voting rights of any class or series. |
25 | (2) The corporate action must be approved by vote of the |
26 | shareholders of each class or series entitled to cast at |
27 | least two-thirds of the votes that all shareholders of the |
28 | class or series are entitled to cast on the corporate action. |
29 | "Specific public benefit." Includes the following: |
30 | (1) providing low-income or underserved individuals or |
|
1 | communities with beneficial products or services; |
2 | (2) promoting economic opportunity for individuals or |
3 | communities beyond the creation of jobs in the normal course |
4 | of business; |
5 | (3) preserving the environment; |
6 | (4) improving human health; |
7 | (5) promoting the arts, sciences or advancement of |
8 | knowledge; |
9 | (6) increasing the flow of capital to entities with a |
10 | public benefit purpose; and |
11 | (7) the accomplishment of any other particular benefit |
12 | for society or the environment. |
13 | "Subsidiary." An association in which a person owns |
14 | beneficially or of record 50% or more of the outstanding equity |
15 | interests. The percentage of ownership in an association shall |
16 | be calculated as if all outstanding rights to acquire equity |
17 | interests in the association had been exercised. |
18 | "Third-party standard." A recognized standard for defining, |
19 | reporting and assessing corporate social and environmental |
20 | performance that is: |
21 | (1) developed by a person that is independent of the |
22 | benefit corporation; and |
23 | (2) transparent because the following information about |
24 | the standard is publicly available: |
25 | (i) the factors considered when measuring the |
26 | performance of a business; |
27 | (ii) the relative weightings of those factors; and |
28 | (iii) the identity of the persons who developed and |
29 | control changes to the standard and the process by which |
30 | those changes are made. |
|
1 | § 3303. Formation of benefit corporations. |
2 | A benefit corporation shall be formed in accordance with |
3 | Article B (relating to domestic business corporations generally) |
4 | except that its articles shall also state that it is a benefit |
5 | corporation. |
6 | § 3304. Election of an existing business corporation to become |
7 | a benefit corporation. |
8 | (a) Amendment.--A business corporation may become a benefit |
9 | corporation by amending its articles so that they contain, in |
10 | addition to the requirements of section 1911(b) (relating to |
11 | amendment of articles authorized), a statement that the |
12 | corporation is a benefit corporation. The amendment shall not be |
13 | effective unless it is adopted by at least the minimum status |
14 | vote. |
15 | (b) Fundamental transactions.--If a corporation that is not |
16 | a benefit corporation is a party to a merger, consolidation or |
17 | division or is the exchanging corporation in a share exchange, |
18 | and the surviving, new or any resulting corporation in the |
19 | merger, consolidation, division or share exchange is to be a |
20 | benefit corporation, then the plan of merger, consolidation, |
21 | division or share exchange shall not be effective unless it is |
22 | adopted by the corporation by at least the minimum status vote. |
23 | § 3305. Termination of benefit corporation status. |
24 | (a) Amendment.--A benefit corporation may terminate its |
25 | status as a benefit corporation and cease to be subject to this |
26 | chapter by amending its articles to delete the provision |
27 | required under section 3304 (relating to election of an existing |
28 | business corporation to become a benefit corporation) to be |
29 | stated in the articles of a benefit corporation. The amendment |
30 | shall not be effective unless it is adopted by at least the |
|
1 | minimum status vote. |
2 | (b) Fundamental transactions.--If a plan would have the |
3 | effect of terminating the status of a business corporation as a |
4 | benefit corporation, the plan shall not be effective unless it |
5 | is adopted by at least the minimum status vote. |
6 | (c) Involuntary termination.--The status of a corporation as |
7 | a benefit corporation may be terminated involuntarily under |
8 | section 3331(e) (relating to annual benefit report) if it fails |
9 | to file an annual benefit report. |
10 | SUBCHAPTER B |
11 | CORPORATE PURPOSES |
12 | Sec. |
13 | 3311. Corporate purposes. |
14 | § 3311. Corporate purposes. |
15 | (a) General public benefit purpose.--A benefit corporation |
16 | shall have the purpose of creating general public benefit. This |
17 | purpose is in addition to, and may be a limitation on, its |
18 | purpose under section 1301 (relating to purposes) and any |
19 | specific purpose set forth in its articles under subsection (b). |
20 | (b) Optional specific public benefit purpose.--The articles |
21 | of a benefit corporation may identify one or more specific |
22 | public benefits that it is the purpose of the benefit |
23 | corporation to create in addition to its purposes under section |
24 | 1301 and subsection (a). The identification of a specific public |
25 | benefit does not limit the obligation of a benefit corporation |
26 | to create general public benefit. |
27 | (c) Effect of purposes.--The creation of general and |
28 | specific public benefit as provided in subsections (a) and (b) |
29 | is in the best interests of the benefit corporation. |
30 | (d) Amendment.--A benefit corporation may amend its articles |
|
1 | to add, amend or delete the identification of a specific public |
2 | benefit that it is the purpose of the benefit corporation to |
3 | create. The amendment shall not be effective unless it is |
4 | adopted by at least the minimum status vote. |
5 | SUBCHAPTER C |
6 | ACCOUNTABILITY |
7 | Sec. |
8 | 3321. Standard of conduct for directors. |
9 | 3322. Benefit director. |
10 | 3323. Standard of conduct for officers. |
11 | 3324. Benefit officer. |
12 | 3325. Right of action. |
13 | § 3321. Standard of conduct for directors. |
14 | (a) Required considerations.--Without regard to whether the |
15 | benefit corporation is subject to section 1715 (relating to |
16 | exercise of powers generally) or 1716 (relating to alternative |
17 | standard), in discharging the duties of their respective |
18 | positions, the board of directors, committees of the board and |
19 | individual directors of a benefit corporation, in considering |
20 | the best interest of the benefit corporation: |
21 | (1) shall consider the effects of any action upon: |
22 | (i) the shareholders of the benefit corporation; |
23 | (ii) the employees and work force of the benefit |
24 | corporation and its subsidiaries and suppliers; |
25 | (iii) the interests of customers as beneficiaries of |
26 | the general or specific public benefit purposes of the |
27 | benefit corporation; |
28 | (iv) community and societal considerations, |
29 | including those of any community in which offices or |
30 | facilities of the benefit corporation or its subsidiaries |
|
1 | or suppliers are located; |
2 | (v) the local and global environment; and |
3 | (vi) the short-term and long-term interests of the |
4 | benefit corporation, including benefits that may accrue |
5 | to the benefit corporation from its long-term plans and |
6 | the possibility that these interests may be best served |
7 | by the continued independence of the benefit corporation. |
8 | (2) may consider: |
9 | (i) the resources, intent and conduct, whether past, |
10 | stated or potential, of any person seeking to acquire |
11 | control of the corporation; and |
12 | (ii) any other pertinent factors or the interests of |
13 | any other group that they deem appropriate; and |
14 | (3) shall not be required to give priority to the |
15 | interests of any person or group referred to in paragraphs |
16 | (1) and (2) over the interests of any other person or group |
17 | unless the benefit corporation has stated its intention to |
18 | give priority to interests related to a specific public |
19 | benefit purpose identified in its articles. |
20 | (b) Coordination with other provisions of law.--The |
21 | consideration of interests and factors in the manner required |
22 | under subsection (a): |
23 | (1) shall not constitute a violation of section 1712 |
24 | (relating to standard of care and justifiable reliance); and |
25 | (2) is in addition to the ability of directors to |
26 | consider interests and factors as provided in section 1715 or |
27 | 1716. |
28 | (c) Personal liability of directors.--A director shall not |
29 | be personally liable, as such, for monetary damages for any |
30 | action taken as a director if the director performed the duties |
|
1 | of his or her office in compliance with section 1712 and this |
2 | section. |
3 | § 3322. Benefit director. |
4 | (a) General rule.--The board of directors of a benefit |
5 | corporation shall include one director who shall be designated |
6 | as the benefit director and shall have, in addition to all of |
7 | the powers, duties, rights and immunities of the other directors |
8 | of the benefit corporation, the powers, duties, rights and |
9 | immunities provided in this subchapter. |
10 | (b) Election, removal and qualifications.--The benefit |
11 | director shall be elected, and may be removed, in the manner |
12 | provided under Subchapter C of Chapter 17 (relating to directors |
13 | and officers), and shall be an individual who is independent. |
14 | The benefit director may serve as the benefit officer at the |
15 | same time as serving as the benefit director. The articles or |
16 | bylaws of a benefit corporation may prescribe additional |
17 | qualifications of the benefit director not inconsistent with |
18 | this subsection. |
19 | (c) Annual compliance statement.--The benefit director shall |
20 | prepare, and the benefit corporation shall include in the annual |
21 | benefit report to shareholders required under section 3331 |
22 | (relating to annual benefit report), a statement whether, in the |
23 | opinion of the benefit director, the benefit corporation acted |
24 | in accordance with its general and any specific public benefit |
25 | purpose in all material respects during the period covered by |
26 | the report and whether the directors and officers complied with |
27 | sections 3321(a) (relating to standard of conduct for directors) |
28 | and 3323(a) (relating to standard of conduct for officers), |
29 | respectively. If, in the opinion of the benefit director, the |
30 | benefit corporation or its directors or officers failed so to |
|
1 | act, then the statement of the benefit director shall include a |
2 | description of the ways in which the benefit corporation or its |
3 | directors or officers failed so to act. |
4 | (d) Status of actions.--The acts of an individual in the |
5 | capacity of a benefit director shall constitute for all purposes |
6 | acts of that individual in the capacity of a director of the |
7 | benefit corporation. |
8 | (e) Alternative governance arrangements.--If the bylaws of a |
9 | benefit corporation provide that the powers and duties conferred |
10 | or imposed upon the board of directors shall be exercised or |
11 | performed by a person or persons other than the directors |
12 | pursuant to section 1721(a) (relating to board of directors) or |
13 | the bylaws of a statutory close corporation that is a benefit |
14 | corporation provide that the business and affairs of the |
15 | corporation shall be managed by or under the direction of the |
16 | shareholders, then the bylaws of the benefit corporation must |
17 | provide that the person or persons or shareholders who perform |
18 | the duties of a board of directors shall include a person with |
19 | the powers, duties, rights and immunities of a benefit director. |
20 | (f) Personal liability of directors.--Regardless of whether |
21 | the bylaws of a benefit corporation include a provision |
22 | eliminating or limiting the personal liability of directors |
23 | authorized under section 1713 (relating to personal liability of |
24 | directors), a benefit director shall not be personally liable |
25 | for any act or omission in the capacity of a benefit director |
26 | unless the act or omission constitutes self-dealing, willful |
27 | misconduct or a knowing violation of law. |
28 | § 3323. Standard of conduct for officers. |
29 | (a) General rule.--Each officer of a benefit corporation |
30 | shall consider the interests and factors described in section |
|
1 | 3321(a) (relating to standard of conduct for directors) in the |
2 | manner provided in that subsection when: |
3 | (1) the officer has discretion to act with respect to a |
4 | matter; and |
5 | (2) it reasonably appears to the officer that the matter |
6 | may have a material effect on: |
7 | (i) the creation of general or specific public |
8 | benefit by the benefit corporation; or |
9 | (ii) any of the interests or factors referred to in |
10 | section 3321(a). |
11 | (b) Coordination with other provisions of law.--The |
12 | consideration of interests and factors in the manner described |
13 | in subsection (a) shall not constitute a violation of section |
14 | 1712(c) (relating to standard of care and justifiable reliance). |
15 | (c) Personal liability of officers.--An officer shall not be |
16 | personally liable, as such, for monetary damages for any action |
17 | taken as an officer if the officer performed the duties of the |
18 | position in compliance with section 1712(c) and this section. |
19 | § 3324. Benefit officer. |
20 | A benefit corporation may have an officer designated as the |
21 | benefits officer who shall have such authority and shall perform |
22 | such duties in the management of the benefit corporation |
23 | relating to the purpose of the corporation to create general or |
24 | specific public benefit as may be provided by or pursuant to the |
25 | bylaws or, in the absence of controlling provisions in the |
26 | bylaws, as may be determined by or pursuant to resolutions or |
27 | orders of the board of directors. If a benefit corporation has a |
28 | benefit officer, the duties of the benefit officer shall include |
29 | preparing the benefit report required under section 3331 |
30 | (relating to annual benefit report). |
|
1 | § 3325. Right of action. |
2 | (a) General rule.--The duties of directors and officers |
3 | under this chapter, and the general and any specific public |
4 | benefit purpose of a benefit corporation, may be enforced only |
5 | in a benefit enforcement proceeding. No person may bring an |
6 | action or assert a claim against a benefit corporation or its |
7 | directors or officers with respect to the duties of directors |
8 | and officers under this chapter, and the general and any |
9 | specific public benefit purpose of the benefit corporation, |
10 | except in a benefit enforcement proceeding. |
11 | (b) Parties with standing.--A benefit enforcement proceeding |
12 | may be commenced or maintained only: |
13 | (1) directly by the benefit corporation; or |
14 | (2) derivatively by: |
15 | (i) a shareholder; |
16 | (ii) a director; |
17 | (iii) a person or group of persons that owns |
18 | beneficially or of record 10% or more of the equity |
19 | interests in an association of which the benefit |
20 | corporation is a subsidiary; or |
21 | (iv) such other persons as may be specified in the |
22 | articles or bylaws of the benefit corporation. |
23 | (c) Cross reference.--The provisions of Subchapter F of |
24 | Chapter 17 (relating to derivative actions) shall apply to |
25 | derivative actions under this section. |
26 | SUBCHAPTER D |
27 | TRANSPARENCY |
28 | Sec. |
29 | 3331. Annual benefit report. |
30 | § 3331. Annual benefit report. |
|
1 | (a) General rule.--A benefit corporation must deliver to |
2 | each shareholder an annual benefit report including: |
3 | (1) a narrative description of: |
4 | (i) the ways in which the benefit corporation |
5 | pursued general public benefit during the year and the |
6 | extent to which general public benefit was created; |
7 | (ii) the ways in which the benefit corporation |
8 | pursued any specific public benefit that the articles |
9 | state is the purpose of the benefit corporation to create |
10 | and the extent to which that specific public benefit was |
11 | created; and |
12 | (iii) any circumstances that have hindered the |
13 | creation by the benefit corporation of general or |
14 | specific public benefit. |
15 | (2) an assessment of the social and environmental |
16 | performance of the benefit corporation, prepared in |
17 | accordance with a third-party standard applied consistently |
18 | with any application of that standard in prior benefit |
19 | reports or accompanied by an explanation of the reasons for |
20 | any inconsistent application; |
21 | (3) the name of the benefit director and the benefit |
22 | officer, if any, and the address to which correspondence to |
23 | each of them may be directed; |
24 | (4) the compensation paid by the benefit corporation |
25 | during the year to each director in that capacity; |
26 | (5) the name of each person that owns 5% or more of the |
27 | outstanding shares of the benefit corporation either |
28 | beneficially, to the extent known to the benefit corporation |
29 | without independent investigation, or of record; and |
30 | (6) the statement of the benefit director described in |
|
1 | section 3322(c) (relating to benefit director). |
2 | (b) Timing of report.--The benefit report must be sent |
3 | annually to each shareholder within 120 days following the end |
4 | of the fiscal year of the benefit corporation or at the same |
5 | time that the benefit corporation delivers any other annual |
6 | report to its shareholders. |
7 | (c) Internet website posting.--A benefit corporation must |
8 | post its most recent benefit report on the public portion of its |
9 | Internet website, if any, except that the compensation paid to |
10 | directors and any financial or proprietary information included |
11 | in the benefit report may be omitted from the benefit report as |
12 | posted. |
13 | (d) Filing of report.--Concurrently with the delivery of the |
14 | benefit report to shareholders pursuant to subsection (b), the |
15 | benefit corporation must deliver a copy of the benefit report to |
16 | the Department of State for filing, except that the compensation |
17 | paid to directors and any financial or proprietary information |
18 | included in the benefit report may be omitted from the benefit |
19 | report as filed under this section. The department shall charge |
20 | a fee of $70 for filing a benefit report. |
21 | (e) Failure to file report.--If a benefit corporation has |
22 | not delivered a benefit report to the department for a period of |
23 | two years, the department may prepare and file a statement that |
24 | the corporation has forfeited its status as a benefit |
25 | corporation and is no longer subject to this chapter. If the |
26 | corporation subsequently delivers a benefit report to the |
27 | department for filing, the status of the corporation as a |
28 | benefit corporation shall be automatically reinstated upon the |
29 | filing of the benefit report by the department, and the |
30 | corporation shall again be subject to this chapter. |
|
1 | Section 2. This act shall take effect in 60 days. |
|