March 14, 2014 - Introduced by Representatives Hesselbein, Weininger, Genrich,
Hulsey, Sargent, Doyle, Pasch, Ohnstad, Wright, Kolste, Berceau, Barca,
Kahl, Goyke, Thiesfeldt, Vruwink and Richards, cosponsored by Senators
Wirch and T. Cullen. Referred to Committee on Financial Institutions.
AB870,1,5 1An Act to amend 183.0103 (1) and 183.0202 (2); and to create 183.0202 (7),
2subchapter XIV of chapter 183 [precedes 183.1401] and chapter 204 of the
3statutes; relating to: creation of a category of business corporation identified
4as a benefit corporation and a category of limited liability company identified
5as a low-profit limited liability company.
Analysis by the Legislative Reference Bureau
Benefit corporations
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.
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, 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 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 annually prepare and
present to the board of directors a statement as to 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 any specific public benefit and the extent to which such public benefit
was created; and 2) an assessment of the social and environmental performance of

the benefit corporation. The bill also includes certain limitations on imposing
personal liability on directors and officers of benefit corporations.
Low-profit limited liability companies
This bill allows an entity operated for profit and organized as a limited liability
company (LLC) to become a low-profit LLC by stating in its articles of organization
that it is a low-profit LLC. However, to qualify as a low-profit LLC, an LLC must
significantly further the accomplishment of one or more charitable or educational
purposes, cannot have the production of income or appreciation of property as its
primary purpose, and cannot have any political or legislative purpose. In general,
provisions of law applicable to LLCs also apply to low-profit LLCs, although one of
the permissible identifiers in the name of a low-profit LLC is "L3C" instead of "LLC."
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB870,1 1Section 1. 183.0103 (1) of the statutes is amended to read:
AB870,3,72 183.0103 (1) The Except as provided in s. 183.1402, the name of a limited
3liability company as set forth in its articles of organization must contain the words
4"limited liability company" or "limited liability co." or end with the abbreviation
5"L.L.C." or "LLC". The name may not contain language stating or implying that the
6limited liability company is organized for any purpose other than that permitted
7under s. 183.0106 (1).
AB870,2 8Section 2. 183.0202 (2) of the statutes is amended to read:
AB870,3,109 183.0202 (2) A name for the limited liability company that satisfies s. 183.0103
10and, if applicable, s. 183.1402.
AB870,3 11Section 3. 183.0202 (7) of the statutes is created to read:
AB870,3,1212 183.0202 (7) If applicable, the statements under s. 183.1403 (2).
AB870,4 13Section 4. Subchapter XIV of chapter 183 [precedes 183.1401] of the statutes
14is created to read:
AB870,3,1515 Chapter 183
AB870,4,3
1Subchapter XIV
2 low-profit limited
3 liability companies
AB870,4,6 4183.1401 Definition. In this subchapter, "low-profit limited liability
5company" means a limited liability company that is operated for profit and that
6satisfies the requirements under s. 183.1403.
AB870,4,10 7183.1402 Name. The name of a low-profit limited liability company as set
8forth in its articles of organization must contain the words "low-profit limited
9liability company" or "low-profit limited liability co." or end with the abbreviation
10"L3C".
AB870,4,14 11183.1403 Requirements. (1) To qualify as a low-profit limited liability
12company under this subchapter, a limited liability company shall at all times
13significantly further the accomplishment of one or more charitable or educational
14purposes within the meaning of section 170 (c) (2) (B) of the Internal Revenue Code.
AB870,4,17 15(2) To qualify as a low-profit limited liability company under this subchapter,
16a limited liability company shall state in its articles of organization all of the
17following:
AB870,4,1818 (a) That it is a low-profit limited liability company.
AB870,4,2019 (b) That the production of income or appreciation of property is not its primary
20purpose.
AB870,4,2221 (c) That it has no purpose to accomplish any political or legislative purpose
22within the meaning of section 170 (c) (2) (D) of the Internal Revenue Code.
AB870,4,25 23(3) (a) Subject to par. (b), to qualify as a low-profit limited liability company
24under this subchapter, a limited liability company's operations shall at all times be
25consistent with the statements in sub. (2) (b) and (c).
AB870,5,4
1(b) The fact that a limited liability company produces significant income or
2capital appreciation is not, in the absence of other factors, conclusive evidence that
3the limited liability company has as its primary purpose the production of income or
4appreciation of property.
AB870,5,75 (c) The operating agreement of a low-profit limited liability company may not
6eliminate or reduce the obligations or purposes of the low-profit limited liability
7company under this section.
AB870,5,10 8(4) Except as otherwise provided in this subchapter, all provisions of this
9chapter applicable to domestic limited liability companies are applicable to
10low-profit limited liability companies.
AB870,5,16 11183.1404 Additional duty. (1) In addition to the duties under s. 183.0402,
12a member or manager of a low-profit limited liability company shall discharge his
13or her duties relating to the obligations and purposes of the low-profit limited
14liability company under s. 183.1403 (2) (b) and (c) with the degree of diligence, care,
15and skill that an ordinarily prudent person would exercise under similar
16circumstances.
AB870,5,18 17(2) The operating agreement of a low-profit limited liability company may not
18eliminate or reduce the duty imposed under sub. (1).
AB870,5,23 19183.1405 Ceasing to operate as a low-profit limited liability company.
20A low-profit limited liability company that ceases to meet any of the requirements
21under s. 183.1403 ceases to qualify as a low-profit limited liability company and
22shall promptly amend its articles of organization to remove the statements specified
23in s. 183.1403 (2) and amend its name consistent with s. 183.0103.
AB870,5 24Section 5. Chapter 204 of the statutes is created to read:
AB870,5,2525 CHAPTER 204
AB870,6,1
1BENEFIT CoRpOratiONS
AB870,6,22 SUBCHAPTER I
AB870,6,33 GENERAL PROVISIONS
AB870,6,5 4204.101 Application and effect of chapter. (1) General rule. This chapter
5shall be applicable to all benefit corporations.
AB870,6,10 6(2) Application of business corporation law generally. The existence of a
7provision of this chapter shall not of itself create an implication that a contrary or
8different rule of law is applicable to a business corporation that is not a benefit
9corporation. This chapter shall not affect any statute or rule that is applicable to a
10business corporation that is not a benefit corporation.
AB870,6,15 11(3) Laws applicable to benefit corporations. Except as otherwise provided in
12this chapter, ch. 180 shall be generally applicable to all benefit corporations. The
13specific provisions of this chapter shall control over the general provisions of ch. 180.
14A benefit corporation may be simultaneously subject to this chapter and provisions
15of other chapters.
AB870,6,18 16(4) Organic records. A provision of the articles or bylaws of a benefit
17corporation may not relax, be inconsistent with, or supersede a provision of this
18chapter.
AB870,6,20 19204.102 Definitions. Unless the context clearly indicates otherwise, in this
20chapter:
AB870,6,23 21(1) "Benefit corporation" means a business corporation that has elected to
22become subject to this chapter and whose status as a benefit corporation has not been
23terminated under s. 204.105.
AB870,6,25 24(2) "Benefit director" means the person designated as the benefit director of a
25benefit corporation as provided in s. 204.302.
AB870,7,2
1(3) "Benefit officer" means the officer of a benefit corporation, if any, designated
2as the benefit officer as provided in s. 204.304.
AB870,7,3 3(4) "Entity" has the meaning given in s. 180.0103 (8).
AB870,7,6 4(5) "General public benefit" means a material positive impact on society and
5the environment by the operations of a benefit corporation taken as a whole, through
6activities that promote some combination of specific public benefits.
AB870,7,7 7(6) "Service corporation" has the meaning given in s. 180.1901 (2).
AB870,7,8 8(7) "Specific public benefit" includes all of the following:
AB870,7,109 (a) Providing low-income or underserved individuals or communities with
10beneficial products or services.
AB870,7,1211 (b) Promoting economic opportunity for individuals or communities beyond the
12creation of jobs in the normal course of business.
AB870,7,1313 (c) Preserving the environment.
AB870,7,1414 (d) Improving human health.
AB870,7,1515 (e) Promoting the arts, sciences, or advancement of knowledge.
AB870,7,1616 (f) Increasing the flow of capital to entities with a public benefit purpose.
AB870,7,1817 (g) The accomplishment of any other particular benefit for society or the
18environment.
AB870,7,21 19204.103 Formation of benefit corporations. A benefit corporation shall be
20formed in accordance with ch. 180, except that its articles shall also state that it is
21a benefit corporation.
AB870,8,2 22204.104 Election of an existing business corporation to become a
23benefit corporation.
(1) Amendment. An existing business corporation may
24become a benefit corporation under this chapter by amending its articles so that they

1contain, in addition to the requirements of s. 180.0202, a statement that the
2corporation is a benefit corporation.
AB870,8,9 3(2) Fundamental transactions. If a corporation that is not a benefit
4corporation is a party to a merger, consolidation, or division or is the exchanging
5corporation in a share exchange, and the surviving, new, or any resulting corporation
6in the merger, consolidation, division, or share exchange is to be a benefit
7corporation, then the plan of merger, consolidation, division, or share exchange shall
8not be effective unless the articles of the surviving, new, or resulting corporation
9contain a statement that the corporation is a benefit corporation.
AB870,8,13 10204.105 Termination of benefit corporation status. A benefit corporation
11may terminate its status as such and cease to be subject to this chapter by amending
12its articles to delete the provision required by ss. 204.103 and 204.104 to be stated
13in the articles of a benefit corporation.
AB870,8,1414 SUBCHAPTER II
AB870,8,1515 corporate PurposeS
AB870,8,19 16204.201 Corporate purposes. (1) General public benefit purpose. A
17benefit corporation shall have a purpose of creating general public benefit. This
18purpose is in addition to its purpose under s. 180.0301 and any specific purpose set
19forth in its articles under sub. (2).
AB870,8,24 20(2) Optional specific public benefit purpose. The articles of a benefit
21corporation may identify one or more specific public benefits that it is the purpose
22of the benefit corporation to create in addition to its purposes under s. 180.0301 and
23sub. (1). The identification of a specific public benefit under this subsection does not
24limit the obligation of a benefit corporation to create general public benefit.
AB870,9,3
1(3) Effect of purposes. The creation of general public benefit and specific
2public benefit as provided in subs. (1) and (2) shall be considered to be in the best
3interests of the benefit corporation.
AB870,9,6 4(4) Amendment. A benefit corporation may amend its articles to add, amend,
5or delete the identification of a specific public benefit that it is the purpose of the
6benefit corporation to create.
AB870,9,9 7(5) Service corporations. A service corporation that is a benefit corporation
8is not limited by ss. 180.1903 and 180.1905 in its authority to create general public
9benefit or a specific public benefit.
AB870,9,1010 SUBCHAPTER III
AB870,9,1111 ACCOUNTABILITY
AB870,9,17 12204.301 Standard of conduct for directors. (1) Consideration of
13interests.
(a) Notwithstanding ss. 180.0302 (15) and 180.0827, in discharging the
14duties of their respective positions, the board of directors, committees of the board,
15and individual directors of a benefit corporation, in considering the best interests of
16the benefit corporation, shall consider the effects of any action or inaction on all of
17the following:
AB870,9,1818 1. The shareholders of the benefit corporation.
AB870,9,2019 2. The employees and workforce of the benefit corporation and its subsidiaries
20and suppliers.
AB870,9,2221 3. The interests of customers as beneficiaries of the general public benefit or
22specific public benefit purposes of the benefit corporation.
AB870,9,2523 4. Community and societal factors, including those of any community in which
24offices or facilities of the benefit corporation or its subsidiaries or suppliers are
25located.
AB870,10,1
15. The local and global environment.
AB870,10,52 6. The short-term and long-term interests of the benefit corporation, including
3benefits that may accrue to the benefit corporation from its long-term plans and the
4possibility that these interests may be best served by the continued corporate
5independence of the benefit corporation.
AB870,10,76 7. The ability of the benefit corporation to accomplish its general public benefit
7purpose and any specific public benefit purpose.
AB870,10,118 (b) Notwithstanding ss. 180.0302 (15) and 180.0827, in discharging the duties
9of their respective positions, the board of directors, committees of the board, and
10individual directors of a benefit corporation, in considering the best interests of the
11benefit corporation, may consider any of the following:
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