PRIOR PRINTER'S NO. 1999

PRINTER'S NO.  3330

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

1616

Session of

2011

  

  

INTRODUCED BY DENLINGER, DePASQUALE, CUTLER, BLOOM, BOYD, BRIGGS, COHEN, CREIGHTON, DALEY, FLECK, GABLER, GEIST, GROVE, HICKERNELL, KILLION, LONGIETTI, MILNE, MURT, PYLE, RAPP, SWANGER, WAGNER AND PAYTON, JUNE 2, 2011

  

  

AS REPORTED FROM COMMITTEE ON COMMERCE, HOUSE OF REPRESENTATIVES, AS AMENDED, APRIL 2, 2012   

  

  

  

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:

- 2 -

 


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

"Benefit director."  Either:

<--

7

(1)  the director designated as the benefit director of a

8

benefit corporation as provided in section 3322 (relating to

<--

9

benefit director). (relating to benefit director); or

<--

10

(2)  a person with one or more of the powers, duties or

11

rights of a benefit director to the extent provided in the

12

bylaws under section 3322.

13

"Benefit enforcement proceeding."  A claim or action brought

<--

14

directly by a benefit corporation, or derivatively on behalf of

15

a benefit corporation, against a director or officer for:

16

(1)  failure to pursue or create the general public

<--

17

benefit purpose of the benefit corporation or any specific

18

public benefit purpose set forth in its articles; or

19

(2)  violation of a any obligation, duty or standard of

<--

20

conduct under this chapter.

21

"Benefit officer."  The officer of a benefit corporation 

<--

22

individual, if any, designated as the benefit officer of a

<--

23

benefit corporation as provided in section 3324 (relating to

24

benefit officer).

25

"General public benefit."  A material positive impact on

26

society and the environment by the operations of a benefit

<--

27

corporation taken as a whole, as measured by, taken as a whole,

<--

28

assessed against a third-party standard, through activities that

<--

29

promote some combination of specific public benefits from the

<--

30

business and operations of a benefit corporation.

- 3 -

 


1

"Independent."  When a person has no material relationship

2

with a benefit corporation or any of its subsidiaries, other

3

than the relationship of serving as the benefit director or

4

benefit officer, either directly or as a shareholder, partner,

<--

5

member or other owner or a director, officer or other manager of

6

an association that has a material relationship with the benefit

7

corporation or any of its subsidiaries. A material relationship

8

between an individual and a benefit corporation or any of its

9

subsidiaries will be conclusively presumed to exist if:

10

(1)  the person is, or has been within the last three

11

years, an employee of the benefit corporation or any of its

12

subsidiaries, other than as a benefit officer;

13

(2)  an immediate family member of the person is, or has

14

been within the last three years, an executive officer, other

15

than a benefit officer, of the benefit corporation or any of

16

its subsidiaries; or

17

(3)  the person, or an association of which the person is

18

a director, officer or other manager or in which the person

19

owns beneficially or of record 5% or more of the outstanding

20

equity interests, owns beneficially or of record 5% or more

21

of the outstanding shares of the benefit corporation. The

22

percentage of ownership in an association shall be calculated

23

as if all outstanding rights to acquire equity interests in

24

the association had been exercised.

25

"Minimum status vote."  When in addition to any other

<--

26

approval or vote required by this subpart or a bylaw adopted by

27

the shareholders:

28

(1)  The holders of shares of every class or series shall

29

be entitled to vote on the corporate action regardless of any

30

limitation stated in the articles of incorporation or bylaws

- 4 -

 


1

on the voting rights of any class or series.

2

(2)  The corporate action must be approved by vote of the

3

shareholders of each class or series entitled to cast at

4

least two-thirds of the votes that all shareholders of the

5

class or series are entitled to cast on the corporate action.

6

"Minimum status vote."

<--

7

(1)  In the case of a business corporation, in addition

8

to any other required approval or vote, the satisfaction of

9

the following conditions:

10

(i)  The shareholders of every class or series must

11

be entitled, as a class, to vote on the corporate action

12

regardless of a limitation stated in the articles of

13

incorporation or bylaws on the voting rights of any class

14

or series.

15

(ii)  The corporate action must be approved by a vote

16

of the shareholders of each class or series entitled to

17

cast at least two-thirds of the votes that all

18

shareholders of the class or series are entitled to cast

19

on the action.

20

(2)  In the case of a domestic association other than a

21

business corporation, in addition to any other required

22

approval, vote or consent, the satisfaction of the following

23

conditions:

24

(i)  The holders of every class or series of equity

25

interest in the association that are entitled to receive

26

a distribution of any kind from the association must be

27

entitled as a class to vote on or consent to the action

28

regardless of any otherwise applicable limitation on the

29

voting or consent rights of any class or series.

30

(ii)  The action must be approved by vote or consent

- 5 -

 


1

of the holders described in subparagraph (i) entitled to

2

cast at least two-thirds of the votes or consents that

3

all of those holders are entitled to cast on the action.

4

"Specific public benefit."  Includes the following:

<--

5

(1)  providing low-income or underserved individuals or

6

communities with beneficial products or services;

7

(2)  promoting economic opportunity for individuals or

8

communities beyond the creation of jobs in the normal course

9

of business;

10

(3)  preserving the environment;

11

(4)  improving human health;

12

(5)  promoting the arts, sciences or advancement of

13

knowledge;

14

(6)  promoting economic development through support of

<--

15

initiatives that increase access to capital for emerging and

16

growing technology enterprises, facilitate the transfer and

17

commercial adoption of new technologies, provide technical

18

and business support to emerging and growing technology

19

enterprises or form support partnerships that support those

20

objectives;

21

(6) (7)  increasing the flow of capital to entities with

<--

22

a public benefit purpose; and

23

(7) (8)  the accomplishment of any other particular

<--

24

benefit for society or the environment.

25

"Subsidiary."  An association in which a person owns

26

beneficially or of record 50% or more of the outstanding equity

27

interests. The percentage of ownership in an association shall

28

be calculated as if all outstanding rights to acquire equity

29

interests in the association had been exercised.

30

"Third-party standard."  A recognized standard for defining,

<--

- 6 -

 


1

reporting and assessing corporate social and environmental

2

performance that is:

3

(1)  developed by a person that is independent of the

4

benefit corporation; and

5

(2)  transparent because the following information about

6

the standard is publicly available:

7

(i)  the factors considered when measuring the

8

performance of a business;

9

(ii)  the relative weightings of those factors; and

10

(iii)  the identity of the persons who developed and

11

control changes to the standard and the process by which

12

those changes are made.

13

"Third-party standard."  A standard for defining, reporting

<--

14

and assessing overall corporate social and environmental

15

performance which is:

16

(1)  Comprehensive in that it assesses the effect of the

17

business and its operations upon the interests listed in

18

section 3321(a)(1)(ii), (iii), (iv) and (v) (relating to

19

standard of conduct for directors).

20

(2)  Developed by an organization that is independent of

21

the benefit corporation and satisfies the following

22

requirements:

23

(i)  Not more than one-third of the members of the

24

governing body of the organization are representatives of  

25

any of the following:

26

(A)  An association of businesses operating in a

27

specific industry the performance of whose members is

28

measured by the standard.

29

(B)  Businesses from a specific industry or an

30

association of businesses in that industry.

- 7 -

 


1

(C)  Businesses whose performance is assessed

2

against the standard.

3

(ii)  The organization is not materially financed by

4

an association or business described in subparagraph (i).

5

(3)  Credible because the standard is developed by a

6

person that both:

7

(i)  Has access to necessary expertise to assess

8

overall corporate social and environmental performance.

9

(ii)  Uses a balanced multistakeholder approach,

10

including a public comment period of at least 30 days to

11

develop the standard.

12

(4)  Transparent because the following information is

13

publicly available:

14

(i)  About the standard:

15

(A)  The criteria considered when measuring the

16

overall social and environmental performance of a

17

business.

18

(B)  The relative weightings, if any, of those

19

criteria.

20

(ii)  About the development and revision of the

21

standard:

22

(A)  The identity of the directors, officers,

23

material owners and the governing body of the

24

organization that developed and controls revisions to

25

the standard.

26

(B)  The process by which revisions to the

27

standard and changes to the membership of the

28

governing body are made.

29

(C)  An accounting of the sources of financial

30

support for the organization, with sufficient detail

- 8 -

 


1

to disclose any relationships that could reasonably

2

be considered to present a potential conflict of

3

interest.

4

§ 3303.  Formation of benefit corporations.

5

A benefit corporation shall be formed in accordance with

6

Article B (relating to domestic business corporations generally)

7

except that its articles shall also state that it is a benefit

8

corporation.

9

§ 3304.  Election of an existing business corporation to become

<--

10

a benefit corporation benefit corporation status.

<--

11

(a)  Amendment.--A An existing business corporation may

<--

12

become a benefit corporation by amending its articles so that

13

they contain, in addition to the requirements of section 1911(b)

<--

14

(relating to amendment of articles authorized) 1306(a) (relating

<--

15

to articles of incorporation), a statement that the corporation

16

is a benefit corporation. The amendment shall not be effective

17

unless it is adopted by at least the minimum status vote.

18

(b)  Fundamental transactions.--If a corporation an

<--

19

association that is not a benefit corporation is a party to a

20

merger, consolidation or division or is the exchanging

21

corporation association in a share exchange, and the surviving,

<--

22

new or any resulting corporation association in the merger,

<--

23

consolidation, division or share exchange is to be a benefit

24

corporation, then the plan of merger, consolidation, division or

25

share exchange shall not be effective unless it is adopted by

26

the corporation by at least the minimum status vote.

27

§ 3305.  Termination of benefit corporation status.

28

(a)  Amendment.--A benefit corporation may terminate its

29

status as a benefit corporation and cease to be subject to this

30

chapter by amending its articles to delete the provision

- 9 -

 


1

required under section 3304 (relating to election of an existing

2

business corporation to become a benefit corporation) to be

3

stated in the articles of a benefit corporation. The amendment

4

shall not be effective unless it is adopted by at least the

5

minimum status vote.

6

(b)  Fundamental transactions.--If a plan would have the

7

effect of terminating the status of a business corporation as a

8

benefit corporation, the plan shall not be effective unless it

9

is adopted by at least the minimum status vote. Any sale, lease,

<--

10

exchange or other disposition of all or substantially all of the

11

assets of a benefit corporation, unless the transaction is in

12

the usual and regular course of business, shall not be effective

13

unless the transaction is approved by at least the minimum

14

status vote.

15

(c)  Involuntary termination.--The status of a corporation as

<--

16

a benefit corporation may be terminated involuntarily under

17

section 3331(e) (relating to annual benefit report) if it fails

18

to file an annual benefit report.

19

SUBCHAPTER B

20

CORPORATE PURPOSES

21

Sec.

22

3311.  Corporate purposes.

23

§ 3311.  Corporate purposes.

24

(a)  General public benefit purpose.--A benefit corporation

25

shall have the a purpose of creating general public benefit.

<--

26

This purpose is in addition to, and may be a limitation on, its

<--

27

purpose under section 1301 (relating to purposes) and any

<--

28

specific purpose set forth in its articles under subsection (b).

29

(b)  Optional specific public benefit purpose.--The articles

30

of a benefit corporation may identify one or more specific

- 10 -

 


1

public benefits that it is the purpose of the benefit

2

corporation to create in addition to its purposes under section

3

1301 and subsection (a). The identification of a specific public

4

benefit does not limit the obligation of a benefit corporation

5

to create general public benefit.

6

(c)  Effect of purposes.--The creation of general and

7

specific public benefit as provided in subsections (a) and (b)

8

is in the best interests of the benefit corporation.

9

(d)  Amendment.--A benefit corporation may amend its articles

10

to add, amend or delete the identification of a specific public

11

benefit that it is the purpose of the benefit corporation to

12

create. The amendment shall not be effective unless it is

13

adopted by at least the minimum status vote.

14

(e)  Professional corporations.--A professional corporation

<--

15

that is a benefit corporation does not violate section 2922(a)

16

(relating to stated purposes) by having the purpose to create

17

general public benefit or a specific public benefit.

18

SUBCHAPTER C

19

ACCOUNTABILITY

20

Sec.

21

3321.  Standard of conduct for directors.

22

3322.  Benefit director.

23

3323.  Standard of conduct for officers.

24

3324.  Benefit officer.

25

3325.  Right of action.

26

§ 3321.  Standard of conduct for directors.

27

(a)  Required considerations Consideration of interests.--

<--

28

Without regard to whether the benefit corporation is subject to

29

section 1715 (relating to exercise of powers generally) or 1716

30

(relating to alternative standard), in discharging the duties of

- 11 -

 


1

their respective positions, the board of directors, committees

2

of the board and individual directors of a benefit corporation,

3

in considering the best interest of the benefit corporation:

4

(1)  shall consider the effects of any action upon:

5

(i)  the shareholders of the benefit corporation;

6

(ii)  the employees and work force of the benefit

7

corporation and its subsidiaries and suppliers;

8

(iii)  the interests of customers as beneficiaries of

9

the general or specific public benefit purposes of the

10

benefit corporation;

11

(iv)  community and societal considerations,

12

including those of any community in which offices or

13

facilities of the benefit corporation or its subsidiaries

14

or suppliers are located;

15

(v)  the local and global environment; and

<--

16

(vi)  the short-term and long-term interests of the

17

benefit corporation, including benefits that may accrue

18

to the benefit corporation from its long-term plans and

19

the possibility that these interests may be best served

20

by the continued independence of the benefit corporation. 

<--

21

corporation; and

<--

22

(vii)  the ability of the benefit corporation to

23

accomplish its general public benefit purpose and any

24

specific public benefit purpose; and

25

(2)  may consider:

26

(i)  the resources, intent and conduct, whether past,

<--

27

stated or potential, of any person seeking to acquire

28

control of the corporation matters listed in section

<--

29

1715(a); and

30

(ii)  any other pertinent factors or the interests of

- 12 -

 


1

any other group that they deem appropriate; and but

<--

2

(3)  shall not be required to give priority to the

3

interests of any person or group referred to in paragraphs

<--

4

(1) and paragraph (1) or (2) over the interests of any other

<--

5

person or group unless the benefit corporation has stated in

<--

6

its articles its intention to give priority to certain

<--

7

interests related to its accomplishment of its general public

<--

8

benefit purpose or of a specific public benefit purpose

9

identified in its articles.

10

(b)  Coordination with other provisions of law.--The

11

consideration of interests and factors in the manner required

12

under subsection (a):

13

(1)  shall not constitute a violation of section 1712

14

(relating to standard of care and justifiable reliance); and

15

(2)  is in addition to the ability of directors to

16

consider interests and factors as provided in section 1715 or

17

1716.

18

(c)  Personal liability of directors.--A director shall not

<--

19

(c)  Exoneration from personal liability.--

<--

20

(1)  A director shall not be personally liable, as such,

21

for monetary damages for any action taken as a director if

22

the director performed the duties of his or her office in

23

compliance with section 1712 and this section.

24

(2)  A director shall not be personally liable for

<--

25

monetary damages for failure of the benefit corporation to

26

create general public benefit or a specific public benefit.

27

(d)  Limitation on standing.--A director does not have a  

28

duty to a person that is a beneficiary of the general public

29

benefit purpose or a specific public benefit purpose of a

30

benefit corporation arising from the status of the person as a

- 13 -

 


1

beneficiary.

2

§ 3322.  Benefit director.

3

(a)  General rule.--The board of directors of a benefit

4

corporation shall include one a director who shall be designated

<--

5

as the benefit director and shall have, in addition to all of

6

the powers, duties, rights and immunities of the other directors

7

of the benefit corporation, the powers, duties, rights and

8

immunities provided in this subchapter.

9

(b)  Election, removal and qualifications.--The benefit

10

director shall be elected, and may be removed, in the manner

11

provided under Subchapter C of Chapter 17 (relating to directors

12

and officers), and shall be an individual who is independent.

13

The benefit director may serve as the benefit officer at the

14

same time as serving as the benefit director. The articles or

15

bylaws of a benefit corporation may prescribe additional

16

qualifications of the benefit director not inconsistent with

17

this subsection.

18

(c)  Annual compliance statement.--The benefit director shall

19

prepare, and the benefit corporation shall include in the annual

20

benefit report to shareholders required under section 3331

21

(relating to annual benefit report), a statement whether, in the

22

opinion of the benefit director, the benefit corporation acted

23

in accordance with its general and any specific public benefit

24

purpose in all material respects during the period covered by

25

the report and whether the directors and officers complied with

26

sections 3321(a) (relating to standard of conduct for directors)

27

and 3323(a) (relating to standard of conduct for officers),

28

respectively. If, in the opinion of the benefit director, the

29

benefit corporation or its directors or officers failed so to

30

act, then the statement of the benefit director shall include a

- 14 -

 


1

description of the ways in which the benefit corporation or its

2

directors or officers failed so to act.

3

(d)  Status of actions.--The acts of an individual in the

4

capacity of a benefit director shall constitute for all purposes

5

acts of that individual in the capacity of a director of the

6

benefit corporation.

7

(e)  Alternative governance arrangements.--If the bylaws of a

<--

8

benefit corporation provide that the powers and duties conferred

9

or imposed upon the board of directors shall be exercised or

10

performed by a person or persons other than the directors

11

pursuant to section 1721(a) (relating to board of directors) or

12

the bylaws of a statutory close corporation that is a benefit

13

corporation provide that the business and affairs of the

14

corporation shall be managed by or under the direction of the

15

shareholders, then the bylaws of the benefit corporation must

16

provide that the person or persons or shareholders who perform

17

the duties of a board of directors shall include a person with

18

the powers, duties, rights and immunities of a benefit director.

19

(e)  Alternative governance arrangements.--

<--

20

(1)  The bylaws of a benefit corporation must provide

21

that the persons or shareholders who perform the duties of

22

the board of directors include a person with the powers,

23

duties, rights and immunities of a benefit director if any of

24

the following apply:

25

(i)  The bylaws of a benefit corporation provide that

26

the powers and duties conferred or imposed upon the board

27

of directors shall be exercised or performed by a person

28

other than the directors under section 1721(a) (relating

29

to board of directors).

30

(ii)  The bylaws of a statutory close corporation

- 15 -

 


1

that is a benefit corporation provide that the business

2

and affairs of the corporation shall be managed by or

3

under the direction of the shareholders.

4

(2)  A person that exercises one or more of the powers,

5

duties or rights of a benefit director under this subsection:

6

(i)  does not need to be independent of the benefit

7

corporation;

8

(ii)  shall have the immunities of a benefit

9

director;

10

(iii)  may share the powers, duties and rights of a

11

benefit director with one or more other persons; and

12

(iv)  shall not be subject to the procedures for

13

election or removal of directors in Chapter 17 Subchapter

14

C (relating to directors and officers) unless:

15

(A)  the person is also a director of the benefit

16

corporation; or

17

(B)  the bylaws make those procedures applicable.

18

(f)  Personal liability of directors Exoneration from

<--

19

personal liability.--Regardless of whether the bylaws of a

20

benefit corporation include a provision eliminating or limiting

21

the personal liability of directors authorized under section

22

1713 (relating to personal liability of directors), a benefit

23

director shall not be personally liable for any act or omission

24

in the capacity of a benefit director unless the act or omission

25

constitutes self-dealing, willful misconduct or a knowing

26

violation of law.

27

§ 3323.  Standard of conduct for officers.

28

(a)  General rule.--Each officer of a benefit corporation

29

shall consider the interests and factors described in section

30

3321(a) (relating to standard of conduct for directors) in the

- 16 -

 


1

manner provided in that subsection when:

2

(1)  the officer has discretion to act with respect to a

3

matter; and

4

(2)  it reasonably appears to the officer that the matter

5

may have a material effect on:

<--

6

(i)  the creation of general or specific public

7

benefit by the benefit corporation; or

8

(ii)  any of the interests or factors referred to in

9

section 3321(a). on the creation by the benefit

<--

10

corporation of general public benefit or a specific

11

public benefit identified in the articles of the benefit

12

corporation.

13

(b)  Coordination with other provisions of law.--The

14

consideration of interests and factors in the manner described

15

in subsection (a) shall not constitute a violation of section

16

1712(c) (relating to standard of care and justifiable reliance).

17

(c)  Personal liability of officers.--An officer shall not be 

<--

18

(c)  Exoneration from personal liability.--

<--

19

(1)  An officer shall not be personally liable, as such,

20

for monetary damages for any action taken as an officer if

21

the officer performed the duties of the position in

22

compliance with section 1712(c) and this section.

23

(2)  An officer shall not be personally liable for

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24

monetary damages for failure of the benefit corporation to

25

pursue or create general public benefit or a specific public

26

benefit.

27

(d)  Limitation on standing.--An officer does not have a duty

28

to a person that is a beneficiary of the general public benefit

29

purpose or a specific public benefit purpose of a benefit

30

corporation arising from the status of the person as a

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1

beneficiary.

2

§ 3324.  Benefit officer.

3

A benefit corporation may have an officer designated as the

4

benefits officer who shall have such authority and shall perform

5

such duties in the management of the benefit corporation

6

relating to the purpose of the corporation to create general or

7

specific public benefit as may be provided by or pursuant to the

8

bylaws or, in the absence of controlling provisions in the

9

bylaws, as may be determined by or pursuant to resolutions or

10

orders of the board of directors. If a benefit corporation has a

11

benefit officer, the duties of the benefit officer shall include

12

preparing the benefit report required under section 3331

13

(relating to annual benefit report).

14

§ 3325.  Right of action.

15

(a)  General rule.--The duties of directors and officers

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16

under this chapter, and the general and any specific public

17

benefit purpose of a benefit corporation, may be enforced only

18

in a benefit enforcement proceeding. No person may bring an

19

action or assert a claim against a benefit corporation or its

20

directors or officers with respect to the duties of directors

21

and officers under this chapter, and the general and any

22

specific public benefit purpose of the benefit corporation,

23

except in a benefit enforcement proceeding.

24

(a)  Limitations.--

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25

(1)  Except in a benefit enforcement proceeding, no

26

person may bring an action or assert a claim against a

27

benefit corporation or its directors or officers with respect

28

to:

29

(i)  failure to pursue or create general public

30

benefit or a specific public benefit set forth in its

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1

articles; or

2

(ii)  violation of a duty or standard of conduct

3

under this chapter.

4

(2)  A benefit corporation shall not be liable for

5

monetary damages under this chapter for any failure of the

6

benefit corporation to pursue or create general public

7

benefit or a specific public benefit.

8

(b)  Parties with standing.--A benefit enforcement proceeding

9

may be commenced or maintained only:

10

(1)  directly by the benefit corporation; or

11

(2)  derivatively by:

12

(i)  a shareholder;

13

(ii)  a director;

14

(iii)  a person or group of persons that owns

15

beneficially or of record 10% 5% or more of the equity

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16

interests in an association of which the benefit

17

corporation is a subsidiary; or

18

(iv)  such other persons as may be specified in the

19

articles or bylaws of the benefit corporation.

20

(c)  Cross reference.--The provisions of Subchapter F of

21

Chapter 17 (relating to derivative actions) shall apply to

22

derivative actions under this section.

23

SUBCHAPTER D

24

TRANSPARENCY

25

Sec.

26

3331.  Annual benefit report.

27

§ 3331.  Annual benefit report.

28

(a)  General rule Contents.--A benefit corporation must

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29

deliver to each shareholder an annual benefit report including:

30

(1)  a A narrative description of:

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1

(i)  the ways in which the benefit corporation

2

pursued general public benefit during the year and the

3

extent to which general public benefit was created;

4

(ii)  the ways in which the benefit corporation

5

pursued any specific public benefit that the articles

6

state is the purpose of the benefit corporation to create

7

and the extent to which that specific public benefit was

8

created; and

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9

(iii)  any circumstances that have hindered the

10

creation by the benefit corporation of general or

11

specific public benefit.; and

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12

(iv)  the process and rationale for selecting or

13

changing the third-party standard used to prepare the

14

benefit report.

15

(2)  an An assessment of the overall social and

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16

environmental performance of the benefit corporation, 

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17

prepared in accordance with against a third-party standard

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18

applied consistently with any application of that standard in

19

prior benefit reports or accompanied by an explanation of the

20

reasons for any inconsistent application;. The assessment

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21

does not need to be audited or certified by a third-party

22

standards provider.

23

(3)  the The name of the benefit director and the benefit

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24

officer, if any, and the address to which correspondence to

25

each of them may be directed;.

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26

(4)  the The compensation paid by the benefit corporation

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27

during the year to each director in that capacity;.

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28

(5)  the The name of each person that owns 5% or more of

<--

29

the outstanding shares of the benefit corporation either

30

beneficially, to the extent known to the benefit corporation

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1

without independent investigation, or of record; and.

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2

(6)  the The statement of the benefit director described

<--

3

in section 3322(c) (relating to benefit director).

4

(7)  A statement of any connection between the

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5

organization that established the third-party standard, or

6

its directors, officers or any holder of 5% or more of the

7

governance interests in the organization, and the benefit

8

corporation or its directors, officers or any holder of 5% or

9

more of the outstanding shares of the benefit corporation,

10

including any financial or governance relationship which

11

might materially affect the credibility of the use of the

12

third-party standard.

13

(8)  If the benefit corporation has dispensed with, or

14

restricted the discretion or powers of, the board of

15

directors, a description of:

16

(i)  the persons that exercise the powers, duties and

17

rights and who have the immunities of the board of

18

directors; and

19

(ii)  the benefit director, as required by section

20

3322(e).

21

(b)  Timing of report.--The benefit report must be sent

<--

22

annually to each shareholder A benefit corporation shall

<--

23

annually send a benefit report to each shareholder either:

24

(1)  within 120 days following the end of the fiscal year

25

of the benefit corporation or at the same; or

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26

(2)  at the same time that the benefit corporation

27

delivers any other annual report to its shareholders.

28

(c)  Internet website posting.--A benefit corporation must

29

post its most recent benefit report all of its benefit reports 

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30

on the public portion of its Internet website, if any, except

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1

that the compensation paid to directors and any financial or

2

proprietary information included in the benefit report may be

3

omitted from the benefit report as posted.

4

(d)  Availability of copies.--If a benefit corporation does

<--

5

not have an Internet website, the benefit corporation shall

6

provide a copy of its most recent benefit report, without

7

charge, to any person that requests a copy, but the compensation

8

paid to directors and financial or proprietary information

9

included in the benefit report may be omitted from the copy of

10

the benefit report provided.

11

(d) (e)  Filing of report.--Concurrently with the delivery of

<--

12

the benefit report to shareholders pursuant to subsection (b),

13

the benefit corporation must deliver a copy of the benefit

14

report to the Department of State department for filing, except

<--

15

that the compensation paid to directors and any financial or

16

proprietary information included in the benefit report may be

17

omitted from the benefit report as filed under this section. The

18

department shall charge a fee of $70 for filing a benefit

19

report.

20

(e)  Failure to file report.--If a benefit corporation has

<--

21

not delivered a benefit report to the department for a period of

22

two years, the department may prepare and file a statement that

23

the corporation has forfeited its status as a benefit

24

corporation and is no longer subject to this chapter. If the

25

corporation subsequently delivers a benefit report to the

26

department for filing, the status of the corporation as a

27

benefit corporation shall be automatically reinstated upon the

28

filing of the benefit report by the department, and the

29

corporation shall again be subject to this chapter.

30

Section 2.  This act shall take effect in 60 90 days.

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