Bill Text: MI SB0359 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Businesses; business corporations; benefit corporations; create. Amends 1972 PA 284 (MCL 450.1101 - 450.2098) by adding ch. 9A. TIE BAR WITH: SB 0360'11
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Introduced - Dead) 2011-10-04 - Referred To Committee On Reforms, Restructuring And Reinventing [SB0359 Detail]
Download: Michigan-2011-SB0359-Introduced.html
SENATE BILL No. 359
May 4, 2011, Introduced by Senators JANSEN, HUNTER and PAPPAGEORGE and referred to the Committee on Economic Development.
A bill to amend 1972 PA 284, entitled
"Business corporation act,"
(MCL 450.1101 to 450.2098) by adding chapter 9A.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
CHAPTER 9A
BENEFIT CORPORATIONS
Sec. 951. (1) As used in this chapter:
(a) "Benefit director" means a director designated as a
benefit director under section 954.
(b) "Benefit enforcement proceeding" means a claim asserted or
action brought directly by a benefit corporation, or derivatively
on behalf of a benefit corporation, against a director or officer
for any of the following:
(i) A failure to pursue the general public benefit purpose of a
benefit corporation or any specific public benefit purpose set
forth in the articles of a benefit corporation.
(ii) A violation of a duty or standard of conduct under this
chapter.
(c) "Benefit officer" means an officer designated as a benefit
officer under section 955.
(d) "General public benefit" means a material positive impact
on society and the environment, taken as a whole, as measured by a
third-party standard, from the business and operations of a benefit
corporation.
(e) "Independent person" means a person that does not have a
material relationship with a benefit corporation or a subsidiary of
a benefit corporation. All of the following apply in determining
whether a person is an independent person:
(i) Designation as a benefit director or benefit officer shall
not be considered a factor in determining whether an individual is
an independent person.
(ii) A material relationship between a person and a benefit
corporation or any of its subsidiaries will be conclusively
presumed to exist if any of the following apply:
(A) The person is, or has been within the last 3 years, an
employee other than a benefit officer of the benefit corporation or
a subsidiary of the benefit corporation.
(B) An immediate family member of the person is, or has been
within the last 3 years, an executive officer other than a benefit
officer of the benefit corporation or a subsidiary of the benefit
corporation.
(C) The person is a beneficial or record owner of 5% or more
of the outstanding shares of the benefit corporation. For purposes
of determining a person's ownership percentage under this sub-
subparagraph and sub-subparagraph (D), any outstanding rights to
acquire shares in a benefit corporation are considered outstanding
shares of the benefit corporation.
(D) An entity of which the person is a director, an officer,
or a manager, or owns beneficially or of record 5% or more of the
outstanding equity interests, is a beneficial or record owner of 5%
or more of the outstanding shares of the benefit corporation.
(f) "Minimum status vote" means an authorization or approval
of a corporate action by the shareholders of a benefit corporation
that meets all of the following:
(i) It meets the shareholder approval or vote requirements of
this act.
(ii) It meets any shareholder approval or vote requirements
included in any provisions of the articles of incorporation or the
bylaws of the benefit corporation adopted by the shareholders.
(iii) The shareholders of every class or series are entitled to
vote on the corporate action regardless of a limitation stated in
the articles of incorporation or bylaws on the voting rights of any
class or series.
(iv) The corporate action is approved by vote of the
shareholders of each class or series entitled to cast at least 2/3
of the votes that all shareholders of the class or series are
entitled to cast on the action.
(g) "Specific public benefit" includes, but is not limited to,
any of the following:
(i) Providing low-income or underserved individuals or
communities with beneficial products or services.
(ii) Promoting economic opportunity for individuals or
communities beyond the creation of jobs in the normal course of
business.
(iii) Preserving the environment.
(iv) Improving human health.
(v) Promoting the arts, sciences, or advancement of knowledge.
(vi) Increasing the flow of capital to entities that have a
public benefit purpose.
(vii) Conferring any other particular benefit on society or the
environment.
(h) In relation to a person, "subsidiary" means an entity in
which the person owns beneficially or of record 50% or more of the
outstanding equity interests. For purposes of determining a
person's ownership percentage under this subdivision, any
outstanding rights to acquire equity interests in an entity are
considered outstanding equity interests in that entity.
(i) "Third-party standard" means a standard for defining,
reporting, and assessing overall corporate social and environmental
performance that is all of the following:
(i) Comprehensive, in that it assesses the effect of the
business and its operations on the interests listed in section
956(1)(a)(ii) to (v).
(ii) Developed by an organization that is independent of the
benefit corporation and satisfies the following requirements:
(A) Not more than 1/3 of the members of the governing body of
the organization are representatives of either of the following:
(I) An association of businesses operating in a specific
industry if the performance of the member businesses is measured by
the standards.
(II) Businesses whose performance is measured by the standard.
(B) The organization is not materially financed by an
association or business described in sub-subparagraph (A).
(iii) Credible, because the standard is developed by a person
that meets both of the following:
(A) The person has access to necessary expertise to assess
overall corporate social and environmental performance.
(B) The person uses a balanced multistakeholder approach that
includes a public comment period of at least 30 days to develop the
standard.
(iv) Transparent, because all of the following are publicly
available:
(A) The criteria considered in the standard when measuring the
overall social and environmental performance of a business, and the
relative weightings of those criteria.
(B) The following information about the development and
revision of the standard:
(I) The identity of the directors, officers, any material
owners, and the governing body of the organization that developed
and controls revisions to the standard.
(II) The process by which revisions to the standard and
changes to the membership of the governing body are made.
(III) An accounting of the sources of financial support for
the organization, with sufficient detail to disclose any
relationships that could reasonably be considered to present a
potential conflict of interest.
(2) This chapter does not apply to any corporation that is not
a benefit corporation or to a corporation that terminates its
status as a benefit corporation under section 952(4).
(3) If there is a conflict between a specific provision of
this chapter and a general provision of this act, the provision of
this chapter applies with respect to a benefit corporation.
Sec. 952. (1) A domestic corporation that meets all of the
following is a benefit corporation and subject to this chapter:
(a) The corporation is formed under this act.
(b) The articles of the corporation state that it is a benefit
corporation. However, an amendment to the articles to include the
statement described in this subdivision is not effective unless it
is adopted by a minimum status vote.
(2) In addition to the purposes described in section 202(b),
the purposes included in the articles of a benefit corporation
shall include creating general public benefit. The purposes may
also include 1 or more specific public benefits identified in the
articles, but the identification of a specific public benefit under
this subdivision does not limit the obligation of a benefit
corporation to create general public benefit.
(3) An amendment to the articles of incorporation of a benefit
corporation to change the purposes of the corporation by adding,
amending, or deleting 1 or more specific public benefits is not
effective unless it is adopted by a minimum status vote.
(4) A benefit corporation may terminate its status as a
benefit corporation by amending its articles to remove the
provisions described in this section. However, an amendment to the
articles described in this subsection is not effective unless it is
adopted by a minimum status vote.
Sec. 953. (1) In addition to the requirements of chapter 7, if
a domestic corporation that is not a benefit corporation is a
constituent corporation in a merger or an exchanging corporation in
a share exchange, and the surviving or acquiring corporation will
be a benefit corporation under the plan of merger or share
exchange, the plan must be approved by a minimum status vote of
that constituent or exchanging corporation.
(2) In addition to the requirements of chapter 7, a plan of
merger or share exchange that would have the effect of terminating
the status of a domestic corporation as a benefit corporation must
be approved by a minimum status vote of that corporation.
Sec. 954. (1) The board of directors of a benefit corporation
shall designate 1 director as a benefit director. All of the
following apply to the benefit director designated by the board:
(a) In addition to the powers, duties, rights, and immunities
of the other directors of the benefit corporation, the benefit
director shall have the powers, duties, rights, and immunities
provided in this chapter.
(b) The benefit director shall be an independent person.
(c) The benefit director may serve as the benefit officer of
the corporation at the same time he or she is serving as the
benefit director.
(d) The articles or bylaws of the benefit corporation may
prescribe additional qualifications of the benefit director that
are not inconsistent with this subsection.
(e) An action of an individual in his or her capacity of a
benefit director is considered an action of that individual in his
or her capacity of a director of the benefit corporation.
(2) The benefit director shall prepare, and the benefit
corporation shall include in the annual benefit report to
shareholders required under section 958, an opinion of the benefit
director on all of the following:
(a) Whether the benefit corporation acted in accordance with
its purpose to create general public benefit and any specific
public benefit included in the purposes of the corporation in all
material respects during the period covered by the report.
(b) Whether the directors and officers complied with sections
954 and 955, respectively.
(c) If it is the opinion of the benefit director that the
benefit corporation failed to comply with subdivision (a) or its
directors or officers failed to comply with subdivision (b), a
description of the ways in which the benefit corporation or its
directors or officers failed to comply.
(3) If a benefit corporation does not have a board pursuant to
an agreement of the shareholders of the benefit corporation under
section 488, the bylaws of the benefit corporation must provide
that the persons or shareholders who perform the duties of the
board include a person with the powers, duties, rights, and
immunities of a benefit director.
(4) Regardless of whether the articles of incorporation of a
benefit corporation include a provision limiting the liability of
directors under section 209, a benefit director is not personally
liable for an act or omission in his or her capacity as a benefit
director unless the act or omission constitutes self-dealing,
willful misconduct, or a knowing violation of law.
Sec. 955. A benefit corporation may designate an officer as
the benefit officer. All of the following apply to a benefit
officer designated by the corporation:
(a) In the management of the benefit corporation, the benefit
officer shall have the powers and duties relating to the purpose of
the corporation to create general public benefit or any specific
public benefit provided by either of the following:
(i) The bylaws.
(ii) If the bylaws do not contain provisions relating to the
powers and duties of the benefit officer, by resolutions or orders
of the board of directors.
(b) The benefit officer shall prepare the benefit report
required under section 958.
Sec. 956. (1) All of the following apply to the board,
committees of the board, and individual directors of a benefit
corporation, and to any officer of a benefit corporation who has
discretion to act with respect to any matter if it reasonably
appears to the officer that the matter may have a material effect
on the creation of general public benefit or a specific public
benefit by the benefit corporation, in discharging the duties of
their respective positions and in considering the best interests of
the benefit corporation:
(a) They shall consider the effects of any action on all of
the following:
(i) The shareholders of the benefit corporation.
(ii) The employees and work force of the benefit corporation
and its subsidiaries and suppliers.
(iii) The interests of customers as beneficiaries of the general
public benefit and any specific public benefit included in the
purpose of the benefit corporation.
(iv) Community and societal considerations, including those of
each community in which offices or facilities of the benefit
corporation and its subsidiaries or suppliers are located.
(v) The local and global environment.
(vi) 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 and the general public benefit and any specific public
benefit included in the purpose of the benefit corporation may be
best served by the continued independence of the benefit
corporation.
(vii) The ability of the benefit corporation to accomplish
general public benefit and any specific public benefit included in
the purposes of the benefit corporation.
(b) In evaluating a person's proposed acquisition of control
of the benefit corporation, they may consider the resources,
intent, and conduct of the person seeking to acquire control of the
benefit corporation.
(c) They may consider any other pertinent factors or the
interests of any other group that they consider appropriate.
(d) They are not required to give priority to the interests of
a particular person or group described in subdivision (a), (b), or
(c) over the interests of any other person or group unless the
benefit corporation has stated its intention to give priority to
interests related to a specific public benefit purpose identified
in its articles.
(2) The consideration of interests and factors by a director
or officer of a benefit corporation under subsection (1) in the
discharge of his or her duties does not constitute a violation of
section 541a.
(3) A director or officer of a benefit corporation is not
personally liable for monetary damages for any of the following:
(a) Any action taken as a director or officer if the director
or officer performed his or her duties in compliance with section
541a and this section.
(b) The failure of the benefit corporation to create general
public benefit or any specific public benefit.
(4) A director or officer of a benefit corporation does not
have a fiduciary duty to a person that is a beneficiary of the
general or any specific public benefit purposes of the benefit
corporation arising from the status of the person as a beneficiary.
(5) Any corporate action taken by a benefit corporation to
advance general public benefit or any specific public benefit
included in the purpose of the corporation under section 952(2) is
presumed to be in the best interests of the benefit corporation.
Sec. 957. (1) The duties of any directors and officers of a
benefit corporation, or the general public benefit purpose or any
specific public benefit purpose of a benefit corporation, may be
enforced only in a benefit enforcement proceeding under this
section. A person shall not bring an action or assert a claim
against a benefit corporation or its directors or officers with
respect to the duties of any directors or officers of the benefit
corporation or the general public benefit purpose or any specific
public benefit purpose of the benefit corporation except in a
benefit enforcement proceeding under this section.
(2) A benefit enforcement proceeding against a benefit
corporation may be commenced or maintained only by 1 of the
following:
(a) Directly, by the benefit corporation.
(b) Derivatively, by any of the following:
(i) A shareholder of the benefit corporation.
(ii) A director of the benefit corporation.
(iii) A person or group of persons that owns beneficially or of
record 5% or more of the equity interests in an entity of which the
benefit corporation is a subsidiary.
(iv) Any other person specified in the articles or bylaws of
the benefit corporation.
Sec. 958. (1) A benefit corporation shall prepare an annual
benefit report. An annual benefit report shall include all of the
following:
(a) A narrative description of the ways in which the benefit
corporation pursued the corporation's general public benefit
purpose during the year and the extent to which general public
benefit was created.
(b) A narrative description of the ways in which the benefit
corporation pursued any specific public benefit included in the
purposes of the corporation in the articles and the extent to which
that specific public benefit was created.
(c) A narrative description of any circumstances that have
hindered the creation by the benefit corporation of general public
benefit or a specific public benefit described in subdivision (a)
or (b).
(d) An assessment of the overall social and environmental
performance of the benefit corporation that meets 1 of the
following:
(i) Is prepared in accordance with a third-party standard
applied consistently with any application of that standard in
previous benefit reports.
(ii) If the assessment is prepared by applying a third-party
standard in a manner inconsistent with that standard as applied in
previous benefit reports, is accompanied by an explanation of the
reasons for the inconsistent application of the standard applied.
(e) The name of the benefit director, the name of the benefit
officer if the corporation has designated a benefit officer, and
the address to which correspondence to each of them may be
directed.
(f) The compensation paid by the benefit corporation during
the year to each director in his or her capacity as a director.
(g) The name of each person that owns 5% or more of the
outstanding shares of the benefit corporation, either beneficially,
to the extent known to the benefit corporation without independent
investigation, or of record.
(h) The opinion of the benefit director described in section
954(3).
(i) A statement of any connection between the organization
that developed the third-party standard, or its directors,
officers, or material owners, and the benefit corporation, or its
directors, officers, or material owners, including any financial or
governance relationship that might materially affect the
credibility of the objective assessment of the third-party
standard.
(2) A benefit corporation shall send each shareholder a copy
of the annual benefit report, either within 120 days following the
end of the fiscal year of the benefit corporation or at the same
time that the benefit corporation delivers any other annual report
to its shareholders.
(3) A benefit corporation shall post its most recent annual
benefit report on the public portion of its internet website, if
any, but the corporation may omit the compensation paid to
directors and financial or proprietary information included in the
benefit report from the benefit report posted on its website.
(4) A benefit corporation shall file the annual benefit report
with the administrator with the report required under section 911,
but the corporation may omit the compensation paid to directors and
financial or proprietary information included in the benefit report
from the benefit report filed with the administrator.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No. 360
of the 96th Legislature is enacted into law.
