S T A T E O F N E W Y O R K
________________________________________________________________________
7855
I N S E N A T E
May 17, 2010
___________
Introduced by Sens. SQUADRON, BRESLIN, SERRANO -- read twice and ordered
printed, and when printed to be committed to the Committee on Corpo-
rations, Authorities and Commissions
AN ACT to amend the business corporation law, in relation to authorizing
the incorporation of benefit corporations, providing for the public
benefit to be created by benefit corporations, for the election and
termination of the status of a benefit corporation, for the standards
of conduct for directors and officers of a benefit corporation, for a
right of action to enforce the duties of directors and officers of a
benefit corporation, and for the preparation and distribution of an
annual benefit report by a benefit corporation
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The business corporation law is amended by adding a new
article 17 to read as follows:
ARTICLE 17
BENEFIT CORPORATIONS
SECTION 1701. APPLICATION AND EFFECT OF ARTICLE.
1702. DEFINITIONS.
1703. FORMATION OF BENEFIT CORPORATIONS.
1704. ELECTION OF AN EXISTING BUSINESS CORPORATION TO BECOME A
BENEFIT CORPORATION.
1705. TERMINATION OF BENEFIT CORPORATION STATUS.
1706. CORPORATE PURPOSES.
1707. STANDARD OF CONDUCT FOR DIRECTORS.
1708. BENEFIT DIRECTOR.
1709. STANDARD OF CONDUCT FOR OFFICERS.
1710. BENEFIT OFFICER.
1711. RIGHT OF ACTION.
1712. ANNUAL BENEFIT REPORT.
S 1701. APPLICATION AND EFFECT OF ARTICLE.
(A) THIS ARTICLE SHALL BE APPLICABLE TO ALL BENEFIT CORPORATIONS.
(B) THE EXISTENCE OF A PROVISION OF THIS ARTICLE SHALL NOT OF ITSELF
CREATE ANY IMPLICATION THAT A CONTRARY OR DIFFERENT RULE OF LAW IS OR
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD17164-02-0
S. 7855 2
WOULD BE APPLICABLE TO A BUSINESS CORPORATION THAT IS NOT A BENEFIT
CORPORATION. THIS ARTICLE SHALL NOT AFFECT ANY STATUTE OR RULE OF LAW
THAT IS OR WOULD BE APPLICABLE TO A BUSINESS CORPORATION THAT IS NOT A
BENEFIT CORPORATION.
(C) EXCEPT AS OTHERWISE PROVIDED IN THIS ARTICLE, THIS CHAPTER SHALL
BE GENERALLY APPLICABLE TO ALL BENEFIT CORPORATIONS. THE SPECIFIC
PROVISIONS OF THIS ARTICLE SHALL CONTROL OVER THE GENERAL PROVISIONS OF
THIS CHAPTER. A BENEFIT CORPORATION MAY BE SIMULTANEOUSLY SUBJECT TO
THIS ARTICLE AND ONE OR MORE OTHER ARTICLES OF THIS CHAPTER.
(D) A PROVISION OF THE CERTIFICATE OF INCORPORATION OR BYLAWS OF A
BENEFIT CORPORATION MAY NOT RELAX, BE INCONSISTENT WITH OR SUPERSEDE ANY
PROVISION OF THIS ARTICLE.
S 1702. DEFINITIONS.
(A) AS USED IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES,
THE TERM:
(1) "BENEFIT CORPORATION" MEANS A BUSINESS CORPORATION THAT HAS
ELECTED TO BECOME SUBJECT TO THIS ARTICLE AND WHOSE STATUS AS A BENEFIT
CORPORATION HAS NOT BEEN TERMINATED AS PROVIDED IN THIS ARTICLE.
(2) "BENEFIT DIRECTOR" MEANS THE DIRECTOR DESIGNATED AS THE BENEFIT
DIRECTOR OF A BENEFIT CORPORATION AS PROVIDED IN SECTION SEVENTEEN
HUNDRED EIGHT OF THIS ARTICLE.
(3) "BENEFIT ENFORCEMENT PROCEEDING" MEANS A CLAIM OR ACTION BROUGHT
DIRECTLY BY A BENEFIT CORPORATION, OR DERIVATIVELY ON BEHALF OF A BENE-
FIT CORPORATION, AGAINST A DIRECTOR OR OFFICER FOR:
(A) FAILURE TO PURSUE THE GENERAL PUBLIC BENEFIT PURPOSE OF THE BENE-
FIT CORPORATION OR ANY SPECIFIC PUBLIC BENEFIT PURPOSE SET FORTH IN ITS
CERTIFICATE OF INCORPORATION; OR
(B) VIOLATION OF A DUTY OR STANDARD OF CONDUCT UNDER THIS ARTICLE.
(4) "BENEFIT OFFICER" MEANS THE OFFICER OF A BENEFIT CORPORATION, IF
ANY, DESIGNATED AS THE BENEFIT OFFICER AS PROVIDED IN SECTION SEVENTEEN
HUNDRED TEN OF THIS ARTICLE.
(5) "GENERAL PUBLIC BENEFIT" MEANS A MATERIAL POSITIVE IMPACT ON SOCI-
ETY AND THE ENVIRONMENT, AS MEASURED BY A THIRD-PARTY STANDARD.
(6) "INDEPENDENT" MEANS THAT A PERSON HAS NO MATERIAL RELATIONSHIP
WITH A BENEFIT CORPORATION OR ANY OF ITS SUBSIDIARIES (OTHER THAN THE
RELATIONSHIP OF SERVING AS THE BENEFIT DIRECTOR OR BENEFIT OFFICER),
EITHER DIRECTLY OR AS A SHAREHOLDER, PARTNER, MEMBER OR OTHER OWNER OR A
DIRECTOR, OFFICER OR OTHER MANAGER OF AN ENTITY THAT HAS A MATERIAL
RELATIONSHIP WITH THE BENEFIT CORPORATION OR ANY OF ITS SUBSIDIARIES. A
MATERIAL RELATIONSHIP BETWEEN AN INDIVIDUAL AND A BENEFIT CORPORATION OR
ANY OF ITS SUBSIDIARIES WILL BE CONCLUSIVELY PRESUMED TO EXIST IF:
(A) THE PERSON IS, OR HAS BEEN WITHIN THE LAST THREE YEARS, AN EMPLOY-
EE OF THE BENEFIT CORPORATION OR ANY OF ITS SUBSIDIARIES, OTHER THAN AS
A BENEFIT OFFICER;
(B) AN IMMEDIATE FAMILY MEMBER OF THE PERSON IS, OR HAS BEEN WITHIN
THE LAST THREE YEARS, AN EXECUTIVE OFFICER, OTHER THAN A BENEFIT OFFI-
CER, OF THE BENEFIT CORPORATION OR ANY OF ITS SUBSIDIARIES; OR
(C) THE PERSON, OR AN ENTITY OF WHICH THE PERSON IS A DIRECTOR, OFFI-
CER OR OTHER MANAGER OR IN WHICH THE PERSON OWNS BENEFICIALLY OR OF
RECORD FIVE PERCENT OR MORE OF THE EQUITY INTERESTS, OWNS BENEFICIALLY
OR OF RECORD FIVE PERCENT OR MORE OF THE SHARES OF THE BENEFIT CORPO-
RATION.
(7) "MINIMUM STATUS VOTE" MEANS THAT, IN ADDITION TO ANY OTHER
APPROVAL OR VOTE REQUIRED BY THIS CHAPTER, THE CERTIFICATE OF INCORPO-
RATION OR A BYLAW ADOPTED BY THE SHAREHOLDERS:
S. 7855 3
(A) THE HOLDERS OF SHARES OF EVERY CLASS OR SERIES SHALL BE ENTITLED
TO VOTE ON THE CORPORATE ACTION REGARDLESS OF ANY LIMITATION STATED IN
THE CERTIFICATE OF INCORPORATION OR BYLAWS ON THE VOTING RIGHTS OF ANY
CLASS OR SERIES.
(B) THE CORPORATE ACTION MUST BE APPROVED BY VOTE OF THE SHAREHOLDERS
OF EACH CLASS OR SERIES ENTITLED TO CAST AT LEAST TWO-THIRDS OF THE
VOTES THAT ALL SHAREHOLDERS OF THE CLASS OR SERIES ARE ENTITLED TO CAST
THEREON.
(8) "SPECIFIC PUBLIC BENEFIT," AS MEASURED BY A THIRD-PARTY STANDARD,
INCLUDES:
(A) PROVIDING LOW-INCOME OR UNDERSERVED INDIVIDUALS OR COMMUNITIES
WITH BENEFICIAL PRODUCTS OR SERVICES;
(B) PROMOTING ECONOMIC OPPORTUNITY FOR INDIVIDUALS OR COMMUNITIES
BEYOND THE CREATION OF JOBS IN THE NORMAL COURSE OF BUSINESS;
(C) PRESERVING THE ENVIRONMENT;
(D) IMPROVING HUMAN HEALTH;
(E) PROMOTING THE ARTS, SCIENCES OR ADVANCEMENT OF KNOWLEDGE;
(F) INCREASING THE FLOW OF CAPITAL TO ENTITIES WITH A PUBLIC BENEFIT
PURPOSE; AND
(G) THE ACCOMPLISHMENT OF ANY OTHER PARTICULAR BENEFIT FOR SOCIETY OR
THE ENVIRONMENT.
(9) "SUBSIDIARY" OF A PERSON MEANS AN ENTITY IN WHICH THE PERSON OWNS
BENEFICIALLY OR OF RECORD FIFTY PERCENT OR MORE OF THE EQUITY INTERESTS.
(10) "THIRD-PARTY STANDARD" MEANS A STANDARD RECOGNIZED BY THE SECRE-
TARY OF STATE OR ITS DESIGNEE OR DESIGNEES FOR DEFINING, REPORTING AND
ASSESSING CORPORATE SOCIAL AND ENVIRONMENTAL PERFORMANCE THAT IS:
(A) DEVELOPED BY A PERSON THAT IS INDEPENDENT OF THE BENEFIT CORPO-
RATION; AND
(B) TRANSPARENT BECAUSE THE FOLLOWING INFORMATION ABOUT THE STANDARD
IS PUBLICLY AVAILABLE:
(I) THE FACTORS CONSIDERED WHEN MEASURING THE PERFORMANCE OF A BUSI-
NESS;
(II) THE RELATIVE WEIGHTINGS OF THOSE FACTORS; AND
(III) THE IDENTITY OF THE PERSONS WHO DEVELOPED AND CONTROL CHANGES TO
THE STANDARD AND THE PROCESS BY WHICH THOSE CHANGES ARE MADE.
(B) FOR PURPOSES OF THE DEFINITIONS OF "INDEPENDENT" AND "SUBSIDIARY"
IN PARAGRAPH (A) OF THIS SECTION, A PERCENTAGE OF OWNERSHIP IN AN ENTITY
SHALL BE CALCULATED AS IF ALL OUTSTANDING RIGHTS TO ACQUIRE EQUITY
INTERESTS IN THE ENTITY HAD BEEN EXERCISED.
S 1703. FORMATION OF BENEFIT CORPORATIONS.
A BENEFIT CORPORATION SHALL BE FORMED IN ACCORDANCE WITH THIS CHAPTER
EXCEPT THAT ITS CERTIFICATE OF INCORPORATION SHALL ALSO STATE THAT IT IS
A BENEFIT CORPORATION.
S 1704. ELECTION OF AN EXISTING BUSINESS CORPORATION TO BECOME A BENEFIT
CORPORATION.
(A) A BUSINESS CORPORATION MAY BECOME A BENEFIT CORPORATION UNDER THIS
ARTICLE BY AMENDING ITS CERTIFICATE OF INCORPORATION SO THAT IT CONTAINS
A STATEMENT THAT THE CORPORATION IS A BENEFIT CORPORATION. THE AMENDMENT
SHALL NOT BE EFFECTIVE UNLESS IT IS ADOPTED BY AT LEAST THE MINIMUM
STATUS VOTE.
(B) IF A CORPORATION THAT IS NOT A BENEFIT CORPORATION IS A PARTY TO A
MERGER OR CONSOLIDATION, AND THE SURVIVING OR CONSOLIDATED CORPORATION
IS TO BE A BENEFIT CORPORATION, THE PLAN OF MERGER OR CONSOLIDATION
SHALL NOT BE EFFECTIVE UNLESS IT IS ADOPTED BY THE CORPORATION BY AT
LEAST THE MINIMUM STATUS VOTE.
S 1705. TERMINATION OF BENEFIT CORPORATION STATUS.
S. 7855 4
(A) A BENEFIT CORPORATION MAY TERMINATE ITS STATUS AS SUCH AND CEASE
TO BE SUBJECT TO THIS ARTICLE BY AMENDING ITS CERTIFICATE OF INCORPO-
RATION TO DELETE THE STATEMENT THAT THE CORPORATION IS A BENEFIT CORPO-
RATION. THE AMENDMENT SHALL NOT BE EFFECTIVE UNLESS IT IS ADOPTED BY AT
LEAST THE MINIMUM STATUS VOTE.
(B) IF A PLAN OR MERGER OR CONSOLIDATION WOULD HAVE THE EFFECT OF
TERMINATING THE STATUS OF A BUSINESS CORPORATION AS A BENEFIT CORPO-
RATION, THE PLAN SHALL NOT BE EFFECTIVE UNLESS IT IS ADOPTED BY AT LEAST
THE MINIMUM STATUS VOTE.
S 1706. CORPORATE PURPOSES.
(A) EVERY BENEFIT CORPORATION SHALL HAVE THE PURPOSE OF CREATING
GENERAL PUBLIC BENEFIT. THIS PURPOSE IS IN ADDITION TO, AND MAY BE A
LIMITATION ON, ITS PURPOSE UNDER SECTION TWO HUNDRED ONE OF THIS CHAPTER
AND ANY SPECIFIC PURPOSE SET FORTH IN ITS ARTICLES UNDER PARAGRAPH (B)
OF THIS SECTION.
(B) THE ARTICLES OF A BENEFIT CORPORATION MAY IDENTIFY ONE OR MORE
SPECIFIC PUBLIC BENEFITS THAT IT IS THE PURPOSE OF THE BENEFIT CORPO-
RATION TO CREATE IN ADDITION TO ITS PURPOSES UNDER SECTION TWO HUNDRED
ONE OF THIS CHAPTER AND PARAGRAPH (A) OF THIS SECTION. THE IDENTIFICA-
TION OF A SPECIFIC PUBLIC BENEFIT UNDER THIS PARAGRAPH DOES NOT LIMIT
THE OBLIGATION OF A BENEFIT CORPORATION TO CREATE GENERAL PUBLIC BENE-
FIT.
(C) THE CREATION OF GENERAL AND SPECIFIC PUBLIC BENEFITS AS PROVIDED
IN PARAGRAPHS (A) AND (B) OF THIS SECTION IS IN THE BEST INTERESTS OF
THE BENEFIT CORPORATION.
(D) A BENEFIT CORPORATION MAY AMEND ITS CERTIFICATE OF INCORPORATION
TO ADD, AMEND OR DELETE THE IDENTIFICATION OF A SPECIFIC PUBLIC BENEFIT
THAT IT IS THE PURPOSE OF THE BENEFIT CORPORATION TO CREATE. THE AMEND-
MENT SHALL NOT BE EFFECTIVE UNLESS IT IS ADOPTED BY AT LEAST THE MINIMUM
STATUS VOTE.
S 1707. STANDARD OF CONDUCT FOR DIRECTORS.
(A) IN DISCHARGING THE DUTIES OF THEIR RESPECTIVE POSITIONS, THE BOARD
OF DIRECTORS, COMMITTEES OF THE BOARD AND INDIVIDUAL DIRECTORS OF A
BENEFIT CORPORATION:
(1) SHALL CONSIDER THE EFFECTS OF ANY ACTION UPON:
(A) THE ABILITY FOR THE BENEFIT CORPORATION TO ACCOMPLISH ITS PUBLIC
BENEFIT PURPOSE;
(B) THE SHAREHOLDERS OF THE BENEFIT CORPORATION;
(C) THE EMPLOYEES AND WORKFORCE OF THE BENEFIT CORPORATION AND ITS
SUBSIDIARIES AND SUPPLIERS;
(D) THE INTERESTS OF CUSTOMERS AS BENEFICIARIES OF THE GENERAL OR
SPECIFIC PUBLIC BENEFIT PURPOSES OF THE BENEFIT CORPORATION;
(E) COMMUNITY AND SOCIETAL CONSIDERATIONS, INCLUDING THOSE OF ANY
COMMUNITY IN WHICH OFFICES OR FACILITIES OF THE BENEFIT CORPORATION OR
ITS SUBSIDIARIES OR SUPPLIERS ARE LOCATED;
(F) THE LOCAL AND GLOBAL ENVIRONMENT; AND
(G) 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;
(2) MAY CONSIDER:
(A) THE RESOURCES, INTENT AND CONDUCT (PAST, STATED AND POTENTIAL) OF
ANY PERSON SEEKING TO ACQUIRE CONTROL OF THE CORPORATION; AND
(B) ANY OTHER PERTINENT FACTORS OR THE INTERESTS OF ANY OTHER GROUP
THAT THEY DEEM APPROPRIATE; AND
S. 7855 5
(3) SHALL NOT BE REQUIRED TO GIVE PRIORITY TO THE INTERESTS OF ANY
PARTICULAR PERSON OR GROUP REFERRED TO IN SUBPARAGRAPHS ONE AND TWO OF
THIS PARAGRAPH OVER THE INTERESTS OF ANY OTHER PERSON OR GROUP UNLESS
THE BENEFIT CORPORATION HAS STATED ITS INTENTION TO GIVE PRIORITY TO
INTERESTS RELATED TO A SPECIFIC PUBLIC BENEFIT PURPOSE IDENTIFIED IN ITS
CERTIFICATE OF INCORPORATION.
(B) THE CONSIDERATION OF INTERESTS AND FACTORS IN THE MANNER REQUIRED
BY PARAGRAPH (A) OF THIS SECTION:
(1) SHALL NOT CONSTITUTE A VIOLATION OF THE PROVISIONS OF SECTION
SEVEN HUNDRED SEVENTEEN OF THIS CHAPTER; AND
(2) IS IN ADDITION TO THE ABILITY OF DIRECTORS TO CONSIDER INTERESTS
AND FACTORS AS PROVIDED IN THIS PARAGRAPH OF THE PROVISIONS OF SECTION
SEVEN HUNDRED SEVENTEEN OF THIS CHAPTER.
(C) A DIRECTOR IS NOT PERSONALLY LIABLE, AS SUCH, FOR MONETARY DAMAGES
FOR ANY ACTION TAKEN AS A DIRECTOR IF THE DIRECTOR PERFORMED THE DUTIES
OF HIS OR HER OFFICE IN COMPLIANCE WITH THE PROVISIONS OF THIS SECTION
AND SECTION SEVEN HUNDRED SEVENTEEN OF THIS CHAPTER.
S 1708. BENEFIT DIRECTOR.
(A) THE BOARD OF DIRECTORS OF A BENEFIT CORPORATION SHALL INCLUDE ONE
DIRECTOR WHO SHALL BE DESIGNATED THE "BENEFIT DIRECTOR" AND SHALL HAVE,
IN ADDITION TO ALL OF THE POWERS, DUTIES, RIGHTS AND IMMUNITIES OF THE
OTHER DIRECTORS OF THE BENEFIT CORPORATION, THE POWERS, DUTIES, RIGHTS
AND IMMUNITIES PROVIDED IN THIS ARTICLE.
(B) THE BENEFIT DIRECTOR SHALL BE ELECTED, AND MAY BE REMOVED, IN THE
MANNER PROVIDED BY ARTICLE SEVEN OF THIS CHAPTER AND SHALL BE AN INDI-
VIDUAL WHO IS INDEPENDENT. THE BENEFIT DIRECTOR MAY SERVE AS THE BENEFIT
OFFICER AT THE SAME TIME AS SERVING AS THE BENEFIT DIRECTOR. THE CERTIF-
ICATE OF INCORPORATION OR BYLAWS OF A BENEFIT CORPORATION MAY PRESCRIBE
ADDITIONAL QUALIFICATIONS OF THE BENEFIT DIRECTOR NOT INCONSISTENT WITH
THIS PARAGRAPH.
(C) THE BENEFIT DIRECTOR SHALL PREPARE, AND THE BENEFIT CORPORATION
SHALL INCLUDE IN THE BENEFIT REPORT TO SHAREHOLDERS REQUIRED BY THE
PROVISIONS OF THIS SECTION AND SECTION SEVENTEEN HUNDRED TWELVE OF THIS
ARTICLE, A STATEMENT WHETHER, IN THE OPINION OF THE BENEFIT DIRECTOR,
THE BENEFIT CORPORATION ACTED IN ACCORDANCE WITH ITS GENERAL, AND ANY
SPECIFIC, PUBLIC BENEFIT PURPOSE IN ALL MATERIAL RESPECTS DURING THE
PERIOD COVERED BY THE REPORT AND WHETHER THE DIRECTORS AND OFFICERS
COMPLIED WITH PARAGRAPH (A) OF SECTION SEVENTEEN HUNDRED SEVEN OF THIS
ARTICLE AND PARAGRAPH (A) OF SECTION SEVENTEEN HUNDRED NINE OF THIS
ARTICLE, RESPECTIVELY. IF IN THE OPINION OF THE BENEFIT DIRECTOR THE
BENEFIT CORPORATION OR ITS DIRECTORS OR OFFICERS FAILED SO TO ACT, THEN
THE STATEMENT OF THE BENEFIT DIRECTOR SHALL INCLUDE A DESCRIPTION OF THE
WAYS IN WHICH THE BENEFIT CORPORATION OR ITS DIRECTORS OR OFFICERS
FAILED SO TO ACT.
(D) THE ACTS OF AN INDIVIDUAL IN THE CAPACITY OF A BENEFIT DIRECTOR
SHALL CONSTITUTE FOR ALL PURPOSES ACTS OF THAT INDIVIDUAL IN THE CAPACI-
TY OF A DIRECTOR OF THE BENEFIT CORPORATION.
(E) IF THE CERTIFICATE OF INCORPORATION OF A BENEFIT CORPORATION
PROVIDES THAT THE POWERS AND DUTIES CONFERRED OR IMPOSED UPON THE BOARD
OF DIRECTORS SHALL BE EXERCISED OR PERFORMED BY ONE OR MORE SHAREHOLDERS
OR OTHER PERSONS, THEN THE CERTIFICATE OF INCORPORATION OF THE BENEFIT
CORPORATION MUST PROVIDE THAT THE SHAREHOLDERS OR OTHER PERSONS WHO
PERFORM THE DUTIES OF A BOARD OF DIRECTORS SHALL INCLUDE A PERSON WITH
THE POWERS, DUTIES, RIGHTS AND IMMUNITIES OF A BENEFIT DIRECTOR.
(F) REGARDLESS OF WHETHER THE BYLAWS OF A BENEFIT CORPORATION INCLUDE
A PROVISION ELIMINATING OR LIMITING THE PERSONAL LIABILITY OF DIRECTORS
S. 7855 6
AUTHORIZED BY PARAGRAPH (B) OF SECTION FOUR HUNDRED TWO OF THIS CHAPTER,
A BENEFIT DIRECTOR SHALL NOT BE PERSONALLY LIABLE FOR ANY ACT OR OMIS-
SION IN THE CAPACITY OF A BENEFIT DIRECTOR UNLESS THE ACT OR OMISSION
CONSTITUTES SELF-DEALING, WILLFUL MISCONDUCT OR A KNOWING VIOLATION OF
LAW.
S 1709. STANDARD OF CONDUCT FOR OFFICERS.
(A) EACH OFFICER OF A BENEFIT CORPORATION SHALL CONSIDER THE INTERESTS
AND FACTORS DESCRIBED IN PARAGRAPH (A) OF SECTION SEVENTEEN HUNDRED
SEVEN OF THIS ARTICLE IN THE MANNER PROVIDED IN SUCH SECTION WHEN:
(1) THE OFFICER HAS DISCRETION TO ACT WITH RESPECT TO A MATTER; AND
(2) IT REASONABLY APPEARS TO THE OFFICER THAT THE MATTER MAY HAVE A
MATERIAL EFFECT ON:
(A) THE CREATION OF GENERAL OR SPECIFIC PUBLIC BENEFIT BY THE BENEFIT
CORPORATION; OR
(B) ANY OF THE INTERESTS OR FACTORS REFERRED TO IN PARAGRAPH (A) OF
SECTION SEVENTEEN HUNDRED SEVEN OF THIS ARTICLE.
(B) THE CONSIDERATION OF INTERESTS AND FACTORS BY AN OFFICER IN THE
MANNER DESCRIBED IN PARAGRAPH (A) OF SECTION SEVENTEEN HUNDRED SEVEN OF
THIS ARTICLE SHALL NOT CONSTITUTE A VIOLATION OF THE DUTIES OF THE OFFI-
CER.
(C) AN OFFICER IS NOT PERSONALLY LIABLE, AS SUCH, FOR MONETARY DAMAGES
FOR ANY ACTION TAKEN AS AN OFFICER IF THE OFFICER PERFORMED THE DUTIES
OF THE POSITION IN COMPLIANCE WITH THIS SECTION.
S 1710. BENEFIT OFFICER.
A BENEFIT CORPORATION MAY HAVE AN OFFICER DESIGNATED THE "BENEFIT
OFFICER" WHO SHALL HAVE SUCH AUTHORITY AND SHALL PERFORM SUCH DUTIES IN
THE MANAGEMENT OF THE BENEFIT CORPORATION RELATING TO THE PURPOSE OF THE
CORPORATION TO CREATE GENERAL OR SPECIFIC PUBLIC BENEFIT AS MAY BE
PROVIDED BY OR PURSUANT TO THE BYLAWS OR, IN THE ABSENCE OF CONTROLLING
PROVISIONS IN THE BYLAWS, AS MAY BE DETERMINED BY OR PURSUANT TO RESOL-
UTIONS OR ORDERS OF THE BOARD OF DIRECTORS. IF A BENEFIT CORPORATION
HAS A BENEFIT OFFICER, THE DUTIES OF THE BENEFIT OFFICER SHALL INCLUDE
PREPARING THE BENEFIT REPORT REQUIRED BY SECTION SEVENTEEN HUNDRED
TWELVE OF THIS ARTICLE.
S 1711. RIGHT OF ACTION.
(A) THE DUTIES OF DIRECTORS AND OFFICERS UNDER THIS CHAPTER, AND THE
GENERAL AND ANY SPECIFIC PUBLIC BENEFIT PURPOSE OF A BENEFIT CORPO-
RATION, MAY BE ENFORCED ONLY IN A BENEFIT ENFORCEMENT PROCEEDING. NO
PERSON MAY BRING AN ACTION OR ASSERT A CLAIM AGAINST A BENEFIT CORPO-
RATION OR ITS DIRECTORS OR OFFICERS WITH RESPECT TO THE DUTIES OF DIREC-
TORS AND OFFICERS UNDER THIS CHAPTER AND THE GENERAL AND ANY SPECIFIC
PUBLIC BENEFIT PURPOSE OF THE BENEFIT CORPORATION EXCEPT IN A BENEFIT
ENFORCEMENT PROCEEDING.
(B) A BENEFIT ENFORCEMENT PROCEEDING MAY BE COMMENCED OR MAINTAINED
ONLY:
(1) DIRECTLY BY THE BENEFIT CORPORATION; OR
(2) DERIVATIVELY BY:
(A) A SHAREHOLDER;
(B) A DIRECTOR;
(C) A PERSON OR GROUP OF PERSONS THAT OWNS BENEFICIALLY OR OF RECORD
TEN PERCENT OR MORE OF THE EQUITY INTERESTS IN AN ENTITY OF WHICH THE
BENEFIT CORPORATION IS A SUBSIDIARY; OR
(D) SUCH OTHER PERSONS AS MAY BE SPECIFIED IN THE CERTIFICATE OF
INCORPORATION OR BYLAWS OF THE BENEFIT CORPORATION.
S 1712. ANNUAL BENEFIT REPORT.
S. 7855 7
(A) A BENEFIT CORPORATION MUST DELIVER TO EACH SHAREHOLDER AN ANNUAL
BENEFIT REPORT INCLUDING:
(1) A NARRATIVE DESCRIPTION OF:
(A) THE WAYS IN WHICH THE BENEFIT CORPORATION PURSUED GENERAL PUBLIC
BENEFIT DURING THE YEAR AND THE EXTENT TO WHICH GENERAL PUBLIC BENEFIT
WAS CREATED;
(B) THE WAYS IN WHICH THE BENEFIT CORPORATION PURSUED ANY SPECIFIC
PUBLIC BENEFIT THAT THE CERTIFICATE OF INCORPORATION STATES IT IS THE
PURPOSE OF THE BENEFIT CORPORATION TO CREATE AND THE EXTENT TO WHICH
THAT SPECIFIC PUBLIC BENEFIT WAS CREATED; AND
(C) ANY CIRCUMSTANCES THAT HAVE HINDERED THE CREATION BY THE BENEFIT
CORPORATION OF GENERAL OR SPECIFIC PUBLIC BENEFIT;
(2) AN ASSESSMENT OF THE PERFORMANCE OF THE BENEFIT CORPORATION, RELA-
TIVE TO ITS GENERAL PUBLIC BENEFIT PURPOSE AND, IF APPLICABLE, ITS
SPECIFIC PUBLIC BENEFIT PURPOSE OR PURPOSES, PREPARED IN ACCORDANCE WITH
A THIRD-PARTY STANDARD APPLIED CONSISTENTLY WITH ANY APPLICATION OF THAT
STANDARD IN PRIOR BENEFIT REPORTS OR ACCOMPANIED BY AN EXPLANATION OF
THE REASONS FOR ANY INCONSISTENT APPLICATION;
(3) THE NAME OF THE BENEFIT DIRECTOR AND THE BENEFIT OFFICER, IF ANY,
AND THE ADDRESS TO WHICH CORRESPONDENCE TO EACH OF THEM MAY BE DIRECTED;
(4) THE COMPENSATION PAID BY THE BENEFIT CORPORATION DURING THE YEAR
TO EACH DIRECTOR IN THAT CAPACITY;
(5) THE NAME OF EACH PERSON THAT OWNS BENEFICIALLY OR OF RECORD FIVE
PERCENT OR MORE OF THE OUTSTANDING SHARES OF THE BENEFIT CORPORATION;
AND
(6) THE STATEMENT OF THE BENEFIT DIRECTOR DESCRIBED IN PARAGRAPH (C)
OF SECTION SEVENTEEN HUNDRED EIGHT OF THIS ARTICLE.
(B) THE BENEFIT REPORT MUST BE SENT ANNUALLY TO EACH SHAREHOLDER WITH-
IN ONE HUNDRED TWENTY DAYS FOLLOWING THE END OF THE FISCAL YEAR OF THE
BENEFIT CORPORATION OR AT THE SAME TIME THAT THE BENEFIT CORPORATION
DELIVERS ANY OTHER ANNUAL REPORT TO ITS SHAREHOLDERS.
(C) A BENEFIT CORPORATION MUST POST ITS MOST RECENT BENEFIT REPORT ON
THE PUBLIC PORTION OF ITS WEBSITE, IF ANY, EXCEPT THAT THE COMPENSATION
PAID TO DIRECTORS AND ANY FINANCIAL OR PROPRIETARY INFORMATION INCLUDED
IN THE BENEFIT REPORT MAY BE OMITTED FROM THE BENEFIT REPORT AS POSTED.
(D) CONCURRENTLY WITH THE DELIVERY OF THE BENEFIT REPORT TO SHAREHOLD-
ERS PURSUANT TO PARAGRAPH (B) OF THIS SECTION, THE BENEFIT CORPORATION
MUST DELIVER A COPY OF THE BENEFIT REPORT TO THE DEPARTMENT FOR FILING,
EXCEPT THAT THE COMPENSATION PAID TO DIRECTORS AND ANY FINANCIAL OR
PROPRIETARY INFORMATION INCLUDED IN THE BENEFIT REPORT MAY BE OMITTED
FROM THE BENEFIT REPORT AS FILED UNDER THIS SECTION.
(E) IF A BENEFIT CORPORATION HAS NOT DELIVERED A BENEFIT REPORT TO THE
SECRETARY OF STATE FOR A PERIOD OF TWO YEARS, THE SECRETARY OF STATE MAY
PREPARE AND FILE A STATEMENT THAT THE CORPORATION HAS FORFEITED ITS
STATUS AS A BENEFIT CORPORATION AND IS NO LONGER SUBJECT TO THIS ARTI-
CLE. IF THE CORPORATION SUBSEQUENTLY DELIVERS A BENEFIT REPORT TO THE
SECRETARY OF STATE FOR FILING, THE STATUS OF THE CORPORATION AS A BENE-
FIT CORPORATION SHALL BE AUTOMATICALLY REINSTATED UPON THE FILING OF THE
BENEFIT REPORT BY THE SECRETARY OF STATE AND THE CORPORATION SHALL AGAIN
BE SUBJECT TO THIS ARTICLE.
S 2. This act shall take effect on the sixtieth day after it shall
have become a law.