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.

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."