senate Bill S79

Signed by Governor Amended

Authorizes the incorporation of benefit corporations

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed by Governor
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actions

  • 05 / Jan / 2011
    • REFERRED TO JUDICIARY
  • 05 / Apr / 2011
    • NOTICE OF COMMITTEE CONSIDERATION - REQUESTED
  • 26 / May / 2011
    • AMEND AND RECOMMIT TO JUDICIARY
  • 26 / May / 2011
    • PRINT NUMBER 79A
  • 01 / Jun / 2011
    • REPORTED AND COMMITTED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
  • 06 / Jun / 2011
    • 1ST REPORT CAL.1014
  • 07 / Jun / 2011
    • 2ND REPORT CAL.
  • 13 / Jun / 2011
    • ADVANCED TO THIRD READING
  • 16 / Jun / 2011
    • PASSED SENATE
  • 16 / Jun / 2011
    • DELIVERED TO ASSEMBLY
  • 16 / Jun / 2011
    • REFERRED TO CODES
  • 17 / Jun / 2011
    • SUBSTITUTED FOR A4692A
  • 17 / Jun / 2011
    • ORDERED TO THIRD READING RULES CAL.395
  • 17 / Jun / 2011
    • PASSED ASSEMBLY
  • 17 / Jun / 2011
    • RETURNED TO SENATE
  • 30 / Nov / 2011
    • DELIVERED TO GOVERNOR
  • 12 / Dec / 2011
    • SIGNED CHAP.599
  • 12 / Dec / 2011
    • APPROVAL MEMO.16

Summary

Authorizes the incorporation of benefit corporations and provides 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, and for the preparation and distribution of an annual benefit report by a benefit corporation.

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Bill Details

See Assembly Version of this Bill:
A4692
Versions:
S79
S79A
Legislative Cycle:
2011-2012
Law Section:
General Construction Law
Laws Affected:
Amd §§65 & 66, Gen Con L; add Art 17 §§1701 - 1708, BC L
Versions Introduced in 2009-2010 Legislative Cycle:
S7855B, S7855D, A11498B

Sponsor Memo

BILL NUMBER:S79

TITLE OF BILL:
An act
to amend the
general construction law and
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 of a benefit
corporation, and for the
preparation and distribution of an annual benefit report by a benefit
corporation

PURPOSE:
This bill authorizes a New York corporation to elect to be a benefit
corporation and thus to have as one of its purposes the creation of
general public benefit.

SUMMARY OF PROVISIONS:
Section 1 of the bill makes conforming changes to the general
construction law.

Section 2 of the bill amends the New York Corporation Law by adding a
new Article 17 entitled "Benefit Corporations."

Within Article 17, section 1701 establishes the application of the
article only to benefit corporations and makes clear that Article 17
does not change the law applicable to corporations that do not elect
to be benefit corporations.

The bill permits the incorporation in New York of "benefit
corporations," which must have a "general public benefit" purpose,
defined in the bill as a material, positive impact on society and the
environment, as measured by a third-party standard, through
activities that promote a combination of specific public benefits.
Likewise, the bill defines a "specific public benefit" to mean
providing individuals or communities with beneficial products or
services; promoting economic opportunity for individuals or
communities beyond the creation of jobs in the normal course of
business; preserving the environment; improving human health;
promoting the arts, sciences, or advancement of knowledge; increasing
the flow of capital to entities with a public benefit purpose; or the
accomplishment of any other particular benefit for society or the
environment.

The bill allows a corporation to elect to be a benefit corporation by
amending its charter to include a statement that the corporation is a
benefit Corporation. An amendment electing benefit corporation status,
and the subsequent termination of benefit corporation status, must be
approved by the stockholders. The bill further allows a benefit
corporation to identify and include one or more specific public
benefits in its charter with the approval of the stockholders.


In determining what the director reasonably believes are in the best
interests of the benefit corporation, a director must consider the
effects of any action or decision not to act on: the benefit
corporation's stockholders; the benefit corporation's employees and
workforce, including the employees and workforce of subsidiaries and
suppliers; the interests of customers as beneficiaries of the general
or specific public benefit purposes of the benefit corporation;
community and societal considerations, including those of any
community in which offices or facilities of the benefit corporation
or the benefit corporation's subsidiaries or suppliers are located;
and the local and global environment.

The director may consider any other pertinent factors or the interests
of any other group, as appropriate. In the reasonable performance of
duties in accordance with the standard provided in the bill, a
benefit corporation director retains standard personal immunity for
his or her actions as a benefit corporation director.

The bill requires a benefit corporation to deliver an annual benefit
report to all stockholders that includes (1) the ways in which the
benefit corporation pursued general public benefit during the
preceding year and the extent to which the general public benefit was
created; and (2) the ways in which the benefit corporation pursued
any specific public benefit included in its charter and the extent to
which that specific public benefit was created. The annual report
must also discuss circumstances hindering the benefit corporation's
ability to create the public benefit and an assessment of the
societal and environmental performance of the benefit corporation.
The report must be delivered to stockholders within 120 days of the
end of the benefit corporation's fiscal year, and posted on the
benefit corporation's public web site, if any exists.

Section 4 of the bill provides that it shall take effect on the 60th
day after it becomes law.

FISCAL IMPACT ON THE STATE:
Potential minimal increase in revenues from filings by existing
corporations that elect to change their status.

JUSTIFICATION:
Tens of thousands of companies are using sustainability and social
innovation as a competitive advantage in the marketplace. Corporate
leaders need to be able to shape business models that enable them to
satisfy the demands of investors, employees and customers who
increasingly demand that corporations serve both shareholders and
society, considering the impact of their decisions on multiple
stakeholders rather than maintaining a singular focus on short term
maximization of financial profits.
Benefit Corporations have the potential to be the corporate entity
that can offer entrepreneurs and investors the option to build and
invest in businesses that meet higher standards of corporate purpose,
accountability and transparency.

As a leading center of business, New York is well-positioned to become
one of the first states to allow the incorporation of these
cutting-edge benefit corporations. Currently, socially-minded
companies are often left with the catch-22 of either not being able


to earn a profit or opening their directors up to possible personal
liability for decisions that do not maximize shareholder value or
increasingly going to states other than New York that are pursuing
this corporate form. This bill solves that dilemma.

Without increasing regulation or impacting the state budget, the bill:

* Removes legal impediments preventing businesses and investors from
making their own decisions to use sustainability and social
innovation as a competitive advantage;

* Gives New York a competitive advantage as a leading state by
accelerating development of a new sector of the economy in New York
by providing legal recognition for businesses that adopt higher
standards of corporate purpose, accountability and transparency;

* Provides clarity to business leaders, general counsels and investors
that the fiduciary duty of benefit corporations affirmatively
includes creating public benefit;

* Expands shareholder rights to enforce this expanded definition of
fiduciary duty, as well as a higher standard of conduct for directors
to consider the impact of their decisions on both financial and
non-financial interests;

* Includes higher standards of transparency, requiring annual
reporting to shareholders and the public about the corporation's
social and environmental performance;

* Helps ensure that these corporations and the positive social and
environmental impact they create are built to last beyond marketing
trends, strong business cycles or existing corporate leadership by
requiring a 3/4 majority vote of shareholders to remove these higher
standards.

LEGISLATIVE HISTORY:
2010: S.7855B (Passed Senate)/A.11498B

EFFECTIVE DATE:
Sixtieth day after becoming law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   79

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced by Sens. SQUADRON, BRESLIN, PARKER, SERRANO -- read twice and
  ordered  printed, and when printed to be committed to the Committee on
  Judiciary

AN ACT to amend the general construction law  and  the  business  corpo-
  ration  law,  in  relation to authorizing the incorporation of benefit
  corporations, providing for the public benefit to be created by  bene-
  fit  corporations, for the election and termination of the status of a
  benefit corporation, for the standards of conduct for directors  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.  Paragraphs  3 and 4 of subdivision d of section 65 of the
general construction law, as added by chapter 451 of the  laws  of  1973
are amended and a new paragraph 5 is added to read as follows:
  3. A railroad corporation, [or]
  4. A transportation corporation[.], OR
  5. A BENEFIT CORPORATION.
  S 2. Section 66 of the general construction law is amended by adding a
new subdivision 4-a to read as follows:
  4-A.  A  "BENEFIT  CORPORATION"  MEANS A BUSINESS CORPORATION THAT HAS
ELECTED TO BECOME SUBJECT TO ARTICLE SEVENTEEN OF  THE  BUSINESS  CORPO-
RATION LAW AND WHOSE STATUS AS A BENEFIT CORPORATION HAS NOT BEEN TERMI-
NATED AS PROVIDED IN ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION LAW.
  S  3.  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.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01470-01-1

S. 79                               2

        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. 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
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.
  (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.
  AS  USED  IN  THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES, THE
TERM:
  (A) "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.
  (B) "GENERAL PUBLIC BENEFIT" MEANS A MATERIAL POSITIVE IMPACT ON SOCI-
ETY AND THE ENVIRONMENT, AS MEASURED BY A THIRD-PARTY STANDARD.
  (C) "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:
  (1) THE PERSON IS, OR HAS BEEN WITHIN THE LAST THREE YEARS, AN EMPLOY-
EE OF THE BENEFIT CORPORATION OR ANY OF ITS SUBSIDIARIES;
  (2)  AN  IMMEDIATE  FAMILY MEMBER OF THE PERSON IS, OR HAS BEEN WITHIN
THE LAST THREE YEARS, AN EXECUTIVE OFFICER OF THE BENEFIT CORPORATION OR
ANY OF ITS SUBSIDIARIES; OR
  (3) 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.
  (D) "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:
  (1) 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.
  (2)  THE CORPORATE ACTION MUST BE APPROVED BY VOTE OF THE SHAREHOLDERS
OF EACH CLASS OR SERIES ENTITLED TO CAST AT LEAST THREE-QUARTERS OF  THE

S. 79                               3

VOTES  THAT ALL SHAREHOLDERS OF THE CLASS OR SERIES ARE ENTITLED TO CAST
THEREON.
  (E)  "SPECIFIC PUBLIC BENEFIT," AS MEASURED BY A THIRD-PARTY STANDARD,
INCLUDES:
  (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.
  (F) "SUBSIDIARY" MEANS AN ENTITY IN WHICH A PERSON  OWNS  BENEFICIALLY
OR OF RECORD FIFTY PERCENT OR MORE OF THE EQUITY INTERESTS.
  (G)  "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:
  (1)  DEVELOPED  BY  A PERSON THAT IS INDEPENDENT OF THE BENEFIT CORPO-
RATION; AND
  (2) TRANSPARENT BECAUSE THE FOLLOWING INFORMATION ABOUT  THE  STANDARD
IS PUBLICLY AVAILABLE:
  (A)  THE  FACTORS CONSIDERED WHEN MEASURING THE PERFORMANCE OF A BUSI-
NESS;
  (B) THE RELATIVE WEIGHTINGS OF THOSE FACTORS; AND
  (C) THE IDENTITY OF THE PERSONS WHO DEVELOPED AND CONTROL  CHANGES  TO
THE STANDARD AND THE PROCESS BY WHICH THOSE CHANGES ARE MADE.
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)  ANY CORPORATION THAT IS NOT A BENEFIT CORPORATION THAT IS A PARTY
TO A MERGER OR CONSOLIDATION IN  WHICH  THE  SURVIVING  OR  CONSOLIDATED
CORPORATION WILL BE A BENEFIT CORPORATION MUST APPROVE THE PLAN OF MERG-
ER  OR  CONSOLIDATION BY AT LEAST THE MINIMUM STATUS VOTE IN ADDITION TO
ANY OTHER VOTE REQUIRED BY THIS CHAPTER,  THE  CERTIFICATE  OF  INCORPO-
RATION OR THE BYLAWS.
S 1705. TERMINATION OF BENEFIT CORPORATION STATUS.
  (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. 79                               4

S 1706. CORPORATE PURPOSES.
  (A) EVERY BENEFIT CORPORATION SHALL HAVE A PURPOSE OF CREATING GENERAL
PUBLIC  BENEFIT.  THIS  PURPOSE  IS  IN  ADDITION  TO ITS PURPOSES UNDER
SECTION TWO HUNDRED ONE OF THIS CHAPTER AND  ANY  SPECIFIC  PURPOSE  SET
FORTH  IN ITS ARTICLES UNDER PARAGRAPH (B) OF THIS SECTION.  THE PURPOSE
TO CREATE GENERAL PUBLIC BENEFIT  MAY  BE  A  LIMITATION  ON  THE  OTHER
PURPOSES  OF  THE BENEFIT CORPORATION, AND SHALL CONTROL OVER ANY INCON-
SISTENT PURPOSE OF THE BENEFIT CORPORATION.
  (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.
  (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
  (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

S. 79                               5

  (2) IS IN ADDITION TO THE ABILITY OF DIRECTORS TO  CONSIDER  INTERESTS
AND FACTORS AS PROVIDED IN SECTION SEVEN HUNDRED SEVENTEEN OF THIS CHAP-
TER.
  (C) NOTWITHSTANDING THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION, A
DIRECTOR OF A BENEFIT CORPORATION HAS THE FIDUCIARY DUTIES OF A DIRECTOR
OF  A  BUSINESS  CORPORATION THAT IS NOT A BENEFIT CORPORATION EXCEPT TO
THE EXTENT THOSE DUTIES ARE INCONSISTENT WITH  THE  PROVISIONS  OF  THIS
ARTICLE.
S 1708.  ANNUAL BENEFIT REPORT.
  (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 COMPENSATION PAID BY THE BENEFIT CORPORATION DURING  THE  YEAR
TO EACH DIRECTOR IN THAT CAPACITY; AND
  (4)  THE  NAME OF EACH PERSON THAT OWNS BENEFICIALLY OR OF RECORD FIVE
PERCENT OR MORE OF THE OUTSTANDING SHARES OF THE BENEFIT CORPORATION.
  (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.    DELIVERY  OF  A
BENEFIT  REPORT  TO SHAREHOLDERS IS IN ADDITION TO ANY OTHER REQUIREMENT
TO DELIVER AN ANNUAL REPORT TO 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. 79                               6

  (F)  THE  ANNUAL  BENEFIT  REPORT  SHALL  BE  IN ADDITION TO ALL OTHER
REPORTING REQUIREMENTS UNDER THIS CHAPTER.
  S  4.  This  act  shall take effect on the sixtieth day after it shall
have become a law.

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