legislation Archives - socentlaw

NEW YORK UNANIMOUSLY PASSES BENEFIT CORPORATION BILL

On June 16th and 17th, New York Senate and Assembly unanimously (62-0 in the Senate and 139-0 in the Assembly) passed a bill that, when signed by Gov. Cuomo, will make New York the 5th state to allow businesses to organize as a Benefit Corporation.

“Benefit Corporations require companies to have a legal responsibility to stakeholders as well as shareholders so they can have a positive impact on their surrounding communities,” said Speaker Sheldon Silver (D-Manhattan). “This legislation demonstrates that profit and social responsibility are not mutually exclusive and that socially and environmentally-friendly business practices can enhance a company’s strength and profitability.”

Under the legislation (A4692-A/Silver) companies organizing as a benefit corporation would be required to pursue a general public benefit, defined as a positive material impact on society and the environment as assessed against a third party standard. The third party standard would include a comprehensive report card, used to measure a corporation’s material positive impact. The report card would score how the corporation handles employees, consumers, the community, the environment, and overall corporate accountability and transparency.

The third party standard would provide points for each positive impact – for example, paying a living wage, providing health benefits, or using renewable materials. In addition to pursuing a general public benefit, a corporation could pursue a specific public benefit encompassing the environment, the arts and sciences, public health, under-served communities, employees, or other benefits for society.

The bill, sponsored by Senator Daniel Squadron (D-Brooklyn) in the Senate, will now be sent to the Governor to be signed.

FLEXIBLE PURPOSE BILL INTRODUCED IN CA

Add California to the list of states that is contemplating a new corporate structure that for social entrepreneurs that are seeking to create mission driven for profit companies. On Tuesday, February 8th, The Corporate Flexibility Act of 2011 was introduced into the California Legislature.

The proposed legislation is the first of its kind and is distinct from the Benefit Corporation laws currently on the books in Vermont and Maryland and pending in seven other state legislatures. Stay tuned for a post focusing on the differences in the the two approaches. It should be interesting to see which approach ends up being adopted by the most states in the end.

photo: PatrickSmithPhotography