NY State Senate Bill S7855B

Archive: Last Bill Status - Passed Senate

Introduced
In Committee
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- Passed Assembly
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Actions

view actions (14)

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 28, 2010	referred to corporations, authorities and commissions returned to assembly repassed senate
Jun 25, 2010	amended on third reading (t) 7855b
Jun 22, 2010	amended on third reading (t) 7855a
Jun 22, 2010	vote reconsidered - restored to third reading returned to senate recalled from assembly
Jun 16, 2010	referred to corporations, authorities and commissions delivered to assembly passed senate ordered to third reading cal.986
Jun 15, 2010	committee discharged and committed to rules
May 17, 2010	referred to corporations, authorities and commissions

Votes

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Original

B (Active)

Original

B (Active)

Co-Sponsors

S7855 - Details

See Assembly Version of this Bill:: A11498
Current Committee:: Assembly Corporations, Authorities And Commissions
Law Section:: General Construction Law
Laws Affected:: Amd §§65 & 66, Gen Con L; add Art 17 §§1701 - 1708, BC L
Versions Introduced in 2011-2012 Legislative Session:: S79, A4692

S7855 - 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.

S7855 - Sponsor Memo

 BILL NUMBER:  S7855

 TITLE OF BILL :
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


 PURPOSE OR GENERAL IDEA OF BILL :
This bill authorizes a New York corporation to elect to be a benefit
corporation provided that the benefit Corporation's purpose is to
create a general public benefit.

 SUMMARY OF PROVISIONS :
Section 1 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 states that benefit
corporations may simultaneously be subject both to Article 17 and
other articles of this chapter.

The bill permits the incorporation in New York of "benefit
corporations," which must designate 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 charier, or by including a statement in the charter that
the corporation is a benefit corporation. An amendment to be formed as
a benefit corporation and the subsequent termination of benefit
corporation status must be approved by the stockholders. Reference to
the fact that a corporation is a benefit corporation must appear
prominently at the head of the benefit corporation's charter document,
each subsequent charter document, and all outstanding stock
certificates. The bill further allows a benefit corporation to
identify and include one or more specific public benefits in its
charter.

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
for-benefit report to all stockholders that includes (l) the ways in
which the benefit corporation pursued a 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 2 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 of multiple
stakeholders rather than maintain a singular focus on short tem1
financial maximization. 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 2/3 majority vote of shareholders to remove these higher
standards.

 EFFECTIVE DATE :
Sixtieth day after becoming law.

S7855 - Bill Text download pdf

                    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.

Co-Sponsors

S7855A - Details

See Assembly Version of this Bill:: A11498
Current Committee:: Assembly Corporations, Authorities And Commissions
Law Section:: General Construction Law
Laws Affected:: Amd §§65 & 66, Gen Con L; add Art 17 §§1701 - 1708, BC L
Versions Introduced in 2011-2012 Legislative Session:: S79, A4692

S7855A - Summary

S7855A - Sponsor Memo

BILL NUMBER:S7855A

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, for a right of
action to enforce the duties of directors and public benefit
purposes of
a benefit
corporation, and for the
preparation and distribution of an annual benefit report by a benefit
corporation

PURPOSE OR GENERAL IDEA OF BILL:
This bill authorizes a New York
corporation to elect to be a benefit corporation provided that the
benefit Corporation's purpose is to create a general public benefit.

SUMMARY OF PROVISIONS:
Section 1 and 2 amend the General Construction Law.
Section 3 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 states that benefit
corporations may simultaneously be subject both to Article 17 and
other articles of this chapter.

The bill permits the incorporation in New York of "benefit
corporations," which must designate 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 charier, or by including a statement in the charter that
the corporation is a benefit corporation. An amendment to be formed
as a benefit corporation and the subsequent termination of benefit
corporation status must be approved by the stockholders. Reference to
the fact that a corporation is a benefit corporation must appear
prominently at the head of the benefit corporation's charter document,
each subsequent charter document, and all outstanding stock
certificates. The bill further allows a benefit corporation to
identify and include one or more specific public benefits in its
charter.

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
for-benefit report to all stockholders that includes (l) the ways in
which the benefit corporation pursued a 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 of multiple
stakeholders rather than maintain a singular focus on short tem1
financial maximization. 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 2/3 majority vote of shareholders to remove these higher
standards.

EFFECTIVE DATE:
Sixtieth day after becoming law.

S7855A - Bill Text download pdf

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

                                 7855--A
    Cal. No. 986

                            I N  S E N A T E

                              May 17, 2010
                               ___________

Introduced  by  Sens.  SQUADRON,  BRESLIN, LARKIN, ONORATO, OPPENHEIMER,
  PARKER, SERRANO -- read twice and ordered printed, and when printed to
  be committed to the Committee on Corporations, Authorities and Commis-
  sions -- committee discharged and said bill committed to the Committee
  on Rules -- ordered to a third reading, passed by Senate and delivered
  to the Assembly, recalled, vote reconsidered, restored to third  read-
  ing,  amended  and ordered reprinted, retaining its place in the order
  of third reading

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,  for  a right of action to enforce the duties of
  directors and public benefit purposes 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 FOR PROFIT BENEFIT CORPORATION HAS NOT
BEEN TERMINATED AS PROVIDED IN ARTICLE SEVENTEEN OF THE BUSINESS  CORPO-
RATION LAW.
  S  3.  The business corporation law is amended by adding a new article
17 to read as follows:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD17164-03-0

S. 7855--A                          2

                               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. 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.  THE  SPECIFIC
PROVISIONS  OF THIS ARTICLE SHALL CONTROL OVER THE GENERAL PROVISIONS 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.
  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, OTHER THAN AS
A BENEFIT OFFICER;
  (2) 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
  (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:

S. 7855--A                          3

  (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
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" OF A PERSON MEANS AN ENTITY IN WHICH THE 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) 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.
  (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-

S. 7855--A                          4

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 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

S. 7855--A                          5

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 SECTION SEVEN HUNDRED SEVENTEEN OF THIS CHAP-
TER.
  (C) 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  ARTICLES  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-

S. 7855--A                          6

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  4.  This  act  shall take effect on the sixtieth day after it shall
have become a law.

Co-Sponsors

S7855B (ACTIVE) - Details

See Assembly Version of this Bill:: A11498
Current Committee:: Assembly Corporations, Authorities And Commissions
Law Section:: General Construction Law
Laws Affected:: Amd §§65 & 66, Gen Con L; add Art 17 §§1701 - 1708, BC L
Versions Introduced in 2011-2012 Legislative Session:: S79, A4692

S7855B (ACTIVE) - Summary

S7855B (ACTIVE) - Sponsor Memo

BILL NUMBER:S7855B

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 OR GENERAL IDEA OF BILL:
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 170 I 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 charier 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.

EFFECTIVE DATE:
Sixtieth day after becoming law.

S7855B (ACTIVE) - Bill Text download pdf

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

                                 7855--B
    Cal. No. 986

                            I N  S E N A T E

                              May 17, 2010
                               ___________

Introduced  by  Sens.  SQUADRON,  BRESLIN, LARKIN, ONORATO, OPPENHEIMER,
  PARKER, SERRANO -- read twice and ordered printed, and when printed to
  be committed to the Committee on Corporations, Authorities and Commis-
  sions -- committee discharged and said bill committed to the Committee
  on Rules -- ordered to a third reading, passed by Senate and delivered
  to the Assembly, recalled, vote reconsidered, restored to third  read-
  ing,  amended  and ordered reprinted, retaining its place in the order
  of third reading -- again amended and ordered reprinted, retaining its
  place in the order of third reading

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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD17164-05-0

S. 7855--B                          2

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. 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.

S. 7855--B                          3

  (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
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-

S. 7855--B                          4

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 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:

S. 7855--B                          5

  (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 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

S. 7855--B                          6

BENEFIT REPORT BY THE SECRETARY OF STATE AND THE CORPORATION SHALL AGAIN
BE SUBJECT TO THIS ARTICLE.
  (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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The New York State Senate

senate Bill S7855B

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Archive: Last Bill Status - Passed Senate

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Votes

Jun 28, 2010 - floor Vote

Floor Vote: Jun 28, 2010

Jun 16, 2010 - floor Vote

Floor Vote: Jun 16, 2010

Jun 16, 2010 - Rules committee Vote

Committee Vote: Jun 16, 2010

Bill Amendments

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S7855 - Details

S7855 - Summary

S7855 - Sponsor Memo

S7855 - Bill Text download pdf

Co-Sponsors

S7855A - Details

S7855A - Summary

S7855A - Sponsor Memo

S7855A - Bill Text download pdf

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S7855B (ACTIVE) - Details

S7855B (ACTIVE) - Summary

S7855B (ACTIVE) - Sponsor Memo

S7855B (ACTIVE) - Bill Text download pdf

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senate Bill S7855B

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Sponsored By

Archive: Last Bill Status - Passed Senate

Your Voice

Actions

Votes

Jun 28, 2010 - floor Vote

Floor Vote: Jun 28, 2010

Jun 16, 2010 - floor Vote

Floor Vote: Jun 16, 2010

Jun 16, 2010 - Rules committee Vote

Committee Vote: Jun 16, 2010

Bill Amendments

Co-Sponsors

S7855 - Details

S7855 - Summary

S7855 - Sponsor Memo

S7855 - Bill Text download pdf

Co-Sponsors

S7855A - Details

S7855A - Summary

S7855A - Sponsor Memo

S7855A - Bill Text download pdf

Co-Sponsors

S7855B (ACTIVE) - Details

S7855B (ACTIVE) - Summary

S7855B (ACTIVE) - Sponsor Memo

S7855B (ACTIVE) - Bill Text download pdf

Comments