This bill creates a category of business corporation identified as a benefit
corporation. A benefit corporation may also fall within other categories of business
corporations, such as service corporations or statutory close corporations.

Under the bill, a benefit corporation may be created by including in the articles
of incorporation at the time of formation, or by later amending the articles of
incorporation to include, a statement that the corporation is a benefit corporation.
A business corporation's status as a benefit corporation may be terminated by
amending the articles of incorporation to delete this statement. When creating or
terminating a business corporation's status as a benefit corporation requires
amending the articles of incorporation, the vote to amend must meet specified voting
requirements.

A benefit corporation must have a purpose of creating general public benefit
and the benefit corporation may also specify in its articles of incorporation additional
specific public benefit purposes. A "general public benefit" is defined as a material
positive impact on society and the environment by the operations of a benefit
corporation taken as a whole, as measured by a third-party standard, through
activities that promote some combination of specific public benefits. Examples of
"specific public benefit" include all of the following: 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

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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.

The board of directors of a benefit corporation must include one director
designated as the "benefit director." The benefit director must prepare, for inclusion
with the benefit corporation's annual benefit report to shareholders (discussed
below), a statement whether, in the opinion of the benefit director, the benefit
corporation acted in accordance with its general public benefit purpose and any
specific public benefit purpose in all material respects and whether the benefit
corporation's directors and officers complied with specified duties. Notwithstanding
provisions of the business corporation law, the board of directors, committees of the
board, and individual directors of a benefit corporation, in considering the best
interests of the benefit corporation, must consider the effects of any action or inaction
on all of the following: 1) the shareholders of the benefit corporation; 2) the
employees and workforce of the benefit corporation and its subsidiaries and
suppliers; 3) the interests of customers as beneficiaries of the general public benefit
or specific public benefit purposes of the benefit corporation; 4) community and
societal factors, including those of any community in which offices or facilities of the
benefit corporation or its subsidiaries or suppliers are located; 5) the local and global
environment; 6) 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; and 7) the ability of the benefit corporation
to accomplish its general public benefit purpose and any specific public benefit
purpose. In addition, the board, committees, and individual directors may consider
the resources, intent, and conduct of any person seeking to acquire control of the
benefit corporation and any other pertinent factors or the interests of any other
group.

A benefit corporation may also designate a "benefit officer," who has the powers
and duties relating to the benefit corporation's purpose of creating general public
benefit or specific public benefit and is also responsible for preparing an annual
benefit report (described below). Each officer of a benefit corporation must consider
the same interests and factors applicable for directors, identified as 1) to 7)
immediately above, when the officer has discretion to act with respect to a matter
that may have a material effect on the creation of general or specific public benefit
by the benefit corporation.

A benefit corporation must prepare an annual benefit report that contains
certain information for the reporting year, including the following: 1) a narrative
description of the ways in which the benefit corporation pursued general public
benefit and specific public benefit and the extent to which such public benefit was
created; 2) an assessment of the social and environmental performance of the benefit
corporation, prepared in accordance with a third-party standard; 3) the names of the
benefit director and benefit officer and the address to which correspondence to each
may be directed; 4) the compensation paid by the benefit corporation to each director;

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5) the name of each person with a 5 percent or greater ownership interest in the
benefit corporation; and 6) the benefit director's statement (discussed above). This
benefit report must be annually delivered to the shareholders, filed with the
Department of Financial Institutions, and posted on the benefit corporation's Web
site if it has one.

The bill generally restricts the ability to bring actions to enforce the general or
specific public benefit purposes of a benefit corporation or the duties of directors or
officers with respect to these purposes. However, the benefit corporation itself and,
derivatively, shareholders, directors, and certain other persons do have a right of
action to enforce these purposes. The bill also includes certain limitations on
imposing personal liability on directors and officers of benefit corporations.