senate Bill S6088

2011-2012 Legislative Session

Relates to the incorporation of benefit corporations and standards of conduct of directors and officers of benefit corporations

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Archive: Last Bill Status - In Committee


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jun 21, 2012 committed to rules
Jun 05, 2012 advanced to third reading
Jun 04, 2012 2nd report cal.
May 31, 2012 1st report cal.984
Jan 04, 2012 referred to judiciary

Votes

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May 31, 2012 - Judiciary committee Vote

S6088
19
0
committee
19
Aye
0
Nay
2
Aye with Reservations
0
Absent
2
Excused
0
Abstained
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Co-Sponsors

S6088 - Bill Details

See Assembly Version of this Bill:
A8907
Current Committee:
Law Section:
General Construction Law
Laws Affected:
Amd §66, Gen Con L; amd §§1702 - 1705, BC L

S6088 - Bill Texts

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Relates to the incorporation of benefit corporations and standards of conduct of directors and officers of benefit corporations.

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BILL NUMBER:S6088

TITLE OF BILL:
An act
to amend the general construction law and the business corporation law,
in relation to benefit corporations

PURPOSE OR GENERAL IDEA OF BILL:
This bill amends Chapter 599 of the
laws of 2011 establishing a new corporate form known as benefit
corporation.

SUMMARY OF PROVISIONS:
Section 1 of the bill makes technical changes
to clarify that a benefit corporation is an Article 4 corporation,
which has also elected to become a benefit corporation pursuant to
Article 17 of the business corporation law.

Section 2 of the bill amends the minimum status vote to be the
greater of two thirds or whatever vote is required in the certificate
of incorporation.

Section 3 and 4 of the bill make conforming changes.

Section 5 of the bill eliminates the allowance for a benefit
corporation to sell or lease substantially all of its assets even if
such transaction is in the usual and regular course of business.

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. The proposed amendments
will further ensure this new corporate form is able to achieve its
intended purpose.

EFFECTIVE DATE:
On the same date and in the same manner as section five of chapter 599
of the laws of 2011, takes effect.

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

    S. 6088                                                  A. 8907

                      S E N A T E - A S S E M B L Y

                               (PREFILED)

                             January 4, 2012
                               ___________

IN  SENATE  --  Introduced  by  Sens. SQUADRON, LARKIN -- read twice and
  ordered printed, and when printed to be committed to the Committee  on
  Judiciary

IN  ASSEMBLY  -- Introduced by M. of A. SILVER -- read once and referred
  to the Committee on Corporations, Authorities and Commissions

AN ACT to amend the general construction law  and  the  business  corpo-
  ration law, in relation to benefit corporations

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 4-a of section 66 of the  general  construction
law,  as added by chapter 599 of the laws of 2011, is amended to read as
follows:
  4-a. A "benefit corporation" means a business corporation incorporated
under article [seventeen] FOUR of  the  business  corporation  law  [and
whose  status  as  a  benefit  corporation  has  not  been terminated as
provided in article seventeen of the business corporation law] THAT  WAS
FORMED  AS  A  BENEFIT  CORPORATION  OR  HAS ELECTED TO BECOME A BENEFIT
CORPORATION AS PROVIDED IN ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION
LAW UNTIL SUCH TIME AS IT HAS CEASED TO  BE  A  BENEFIT  CORPORATION  AS
PROVIDED IN ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION LAW.
  S  2.  Paragraphs  (a)  and (d) of section 1702 of the business corpo-
ration law, as added by chapter 599 of the laws of 2011, are amended  to
read as follows:
  (a)  "Benefit  corporation"  means a business corporation incorporated
under [this article and whose status as a benefit  corporation  has  not
been  terminated as provided in this article] ARTICLE FOUR OF THIS CHAP-
TER THAT WAS FORMED AS A BENEFIT CORPORATION OR HAS ELECTED TO BECOME  A
BENEFIT  CORPORATION  AS  PROVIDED IN THIS ARTICLE UNTIL SUCH TIME AS IT
HAS CEASED TO BE A BENEFIT CORPORATION AS PROVIDED IN THIS ARTICLE.
  (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, THE HIGHER OF:
  (1) [The holders of shares of every class or series that are  entitled
to  vote on the corporate action shall be entitled to vote as a class on
the corporate action; and

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD13863-01-1

S. 6088                             2                            A. 8907

  (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] THE VOTE REQUIRED BY THE CERTIFICATE OF INCORPORATION; OR
  (2)  TWO-THIRDS  OF  THE  VOTES ENTITLED TO BE CAST BY THE OUTSTANDING
SHARES OF THE CORPORATION, PROVIDED THAT IF ANY CLASS OF SHARES IS ENTI-
TLED TO VOTE AS A GROUP, APPROVAL SHALL  ALSO  REQUIRE  THE  AFFIRMATIVE
VOTE  OF  THE HOLDERS OF AT LEAST TWO-THIRDS OF THE VOTES ENTITLED TO BE
CAST BY THE OUTSTANDING SHARES OF EACH VOTING GROUP.
  S 3. Section 1703 of the business corporation law, as added by chapter
599 of the laws of 2011, is amended to read as follows:
S 1703. Formation of benefit corporations.
  A benefit corporation shall be [formed in accordance with this chapter
except that] INCORPORATED UNDER ARTICLE FOUR OF THIS CHAPTER, IN ACCORD-
ANCE WITH THE PROVISIONS OF THIS ARTICLE, AND its certificate of  incor-
poration shall also state that it is a benefit corporation.
  S  4.  Paragraphs  (a)  and (b) of section 1704 of the business corpo-
ration law, as added by chapter 599 of the laws of 2011, are amended  to
read as follows:
  (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] SUCH
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] SUCH CORPORATION WILL BECOME
A BENEFIT CORPORATION must approve the plan of merger  or  consolidation
by  at  least  the  minimum  status  vote  in addition to any other vote
required by this  chapter,  the  certificate  of  incorporation  or  the
bylaws.
  S  5.  Paragraphs  (a),  (b)  and  (d) of section 1705 of the business
corporation law, as added by chapter  599  of  the  laws  of  2011,  are
amended to read as follows:
  (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] SUCH amendment shall [not] be  [effective  unless  it  is]
adopted by at least the minimum status vote.
  (b)  [If  a]  ANY  benefit  corporation THAT is a party to a merger or
consolidation in which [the surviving or new corporation  will  not  be]
SUCH  CORPORATION WILL NO LONGER BE a benefit corporation[,] AS A RESULT
OF THE TRANSACTION, MUST APPROVE the plan  of  merger  or  consolidation
[shall  not  be  effective unless it is adopted] by at least the minimum
status vote in addition to any other vote required by this chapter,  the
certificate of incorporation or the bylaws.
  (d)  A  sale, lease, conveyance, exchange, transfer, or other disposi-
tion of all or substantially all of the assets of a benefit corporation,
[unless the transaction is in the usual and regular course  of  business
of the benefit corporation,] shall [not] be [effective unless the trans-
action  is]  approved 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  6.  This  act  shall  take  effect on the same date and in the same
manner as section 5 of chapter 599 of the laws of 2011, takes effect.

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