Relates to the incorporation of benefit corporations and standards of conduct of directors and officers of benefit corporations

1 Co-sponsor

• William J. Larkin Jr.

BILL NUMBER:S6088

Title of bill

An act to amend the general construction law and the business corporation law, in relation to benefit corporations

Purpose or general idea of bill

This bill amends Chapter 599 of the laws of 2011 establishing a new corporate form known as benefit corporation.

Summary of provisions

Section 1 of the bill makes technical changes to clarify that a benefit corporation is an Article 4 corporation, which has also elected to become a benefit corporation pursuant to Article 17 of the business corporation law.

Section 2 of the bill amends the minimum status vote to be the greater of two thirds or whatever vote is required in the certificate of incorporation.

Section 3 and 4 of the bill make conforming changes.

Section 5 of the bill eliminates the allowance for a benefit corporation to sell or lease substantially all of its assets even if such transaction is in the usual and regular course of business.

Justification

Tens of thousands of companies are using sustainability and social innovation as a competitive advantage in the marketplace. Corporate leaders need to be able to shape business models that enable them to satisfy the demands of investors, employees and customers who increasingly demand that corporations serve both shareholders and society, considering the impact of their decisions on multiple stakeholders rather than maintaining a singular focus on short term maximization of financial profits. The proposed amendments will further ensure this new corporate form is able to achieve its intended purpose.

Effective date

On the same date and in the same manner as section five of chapter 599 of the laws of 2011, takes effect.