DENVER–A proposed state Senate bill creating special legal status for companies harmonizing good will and profits has some long-time Colorado business attorneys wary of its repercussions on existing state laws for corporations.
Several states recently adopted “benefit corporation” legislation approving special legal status for companies combining elements of nonprofit and for-profit legal structures. The proposed Colorado legislation will allow companies to opt for a “hybrid” status, requiring them to show profit motives alongside periodic reporting aligning with a social or environmental mission, similar to those of a nonprofit.
“Our interest in benefit corporation legislation is to help promote alternatives to the conventional legal structures of business entities with certain goals and to support social and environmentally conscious business organizations that are also for-profit,” said Jason Wiener, general counsel of Namaste Solar, an employee-owned cooperative residential and commercial solar power company in Boulder.
Directors of companies who opt for benefit corporation status get special protections from shareholder lawsuits when making decisions aligning with charitable causes. Proponents of benefit corporation legislation in Colorado argue current corporate laws only consider the sole goal of maximizing profits.
Said Sen. Bob Bacon, D-Fort Collins, “It’s a new corporate model that many people are interested in. It will have great benefits and bring greater investment and economic activity in Colorado.”
Several business attorneys in Colorado are cautious of the new legislation beacuse it conflicts with business and corporate legal statutes already in place. What may work in states like Maryland, the first state to adopt benefit corporation legislation, may not work in Colorado.
“Lots of for-profit corporations do lots of good things under the rubric of public relations and marketing without any problems,” said Bob Keatinge, an attorney at Holland & Hart and member of the Colorado Bar Association’s business law section.
Originally posted in: Law Week Colorado
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