PASSED! AB 361: Benefit Corporations
Introduced by Marin County Assemblymember Jared Huffman in February 2011, the Benefit Corporation Bill AB 361 would authorize and regulate the formation of a new form of corporate entity known as a benefit corporation.
AB 361 would define the term“benefit corporation” under corporate governance and create specific standards to adhere to which include:
- formed for the purpose of creating a general public benefit
- defined as a material positive impact on society and the environment
- measured by a 3rd-party standard which will satisfy certain requirements
Under AB 361 a benefit corporation may identify one or more specific public benefits as an additional purpose of the corporation including:
- providing low-income or underserved individuals or communities with beneficial products or services
- promoting economic opportunity for individuals or communities beyond the creation of jobs in the ordinary course of business
- preserving the environment
- improving human health
This bill would require directors to consider the impacts of any action the corporation takes on the shareholders, employees, customers, and the environment, and would allow directors to consider the impacts of those actions on the resources, intent, and conduct of any person seeking to acquire control of the benefit corporation.
The bottom line is without increasing regulation or affecting the state budget, the Benefit Corporation Bill AB 361 will:
- Remove legal impediments that prevent businesses and investors from using sustainability and social innovation as a competitive advantage, particularly in liquidity scenarios
- Accelerate development of the new economy being forged by businesses that have higher standards of corporate purpose, accountability, and transparency
- Create a platform for innovative entrepreneurs to build great companies that generate high-quality jobs and economic development for communities
<<B Corporation Public Policies>> Make sure to scroll down to California Benefit Corporation Section.