Bill Text: MN SF2053 | 2013-2014 | 88th Legislature | Engrossed
Bill Title: Minnesota Public Benefit Corporation Act
Spectrum: Moderate Partisan Bill (Democrat 4-1)
Status: (Introduced - Dead) 2014-04-22 - HF substituted on General Orders HF2582 [SF2053 Detail]
Download: Minnesota-2013-SF2053-Engrossed.html
1.2relating to corporations; providing for the organization and operation of public
1.3benefit corporations;proposing coding for new law as Minnesota Statutes,
1.4chapter 304A.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. [304A.001] CITATION.
1.7This chapter may be cited as the "Minnesota Public Benefit Corporation Act."
1.9 Sec. 2. [304A.011] APPLICATION AND EFFECT OF CHAPTER.
1.10 Subdivision 1. General rule. This chapter applies to all public benefit corporations.
1.11 Subd. 2. Laws applicable. Chapter 302A applies to all public benefit corporations
1.12and all statutes and rules of law that apply to a corporation formed under chapter 302A
1.13also apply to a public benefit corporation. If chapter 302A conflicts with sections
1.14304A.001 to 304A.301, sections 304A.001 to 304A.301 govern. The chapter does not
1.15affect a statute or rule of law that applies to a corporation formed under chapter 302A that
1.16is not a public benefit corporation.
1.17 Subd. 3. Chapter not to be varied. A provision of the articles, shareholder control
1.18agreement, or bylaws of a public benefit corporation may not limit, be inconsistent with,
1.19or supersede a provision of this chapter.
1.20 Sec. 3. [304A.021] DEFINITIONS.
2.1 Subdivision 1. Terms. For the purposes of this chapter, unless the language or
2.2context clearly indicates that a different meaning is intended, the words, terms, and
2.3phrases defined in this section have the meanings given them.
2.4 Subd. 2. General benefit corporation. "General benefit corporation" means a
2.5public benefit corporation that elects in its articles to pursue general public benefit and that
2.6may state in its articles a specific public benefit purpose it elects to pursue.
2.7 Subd. 3. General public benefit. "General public benefit" means a net material
2.8positive impact from the business and operations of a general benefit corporation on
2.9society, the environment, and the well-being of present and future generations.
2.10 Subd. 4. Independent. "Independent" means having no material relationship
2.11with a public benefit corporation or a parent, a subsidiary, or other affiliate of a public
2.12benefit corporation.
2.13 Subd. 5. Minimum status vote. "Minimum status vote" means that the shareholders
2.14shall take action by the affirmative vote of the holders of at least two-thirds of all of
2.15the issued and outstanding shares.
2.16 Subd. 6. Organization. "Organization" means a domestic or foreign business or
2.17nonprofit corporation, limited liability company, whether domestic or foreign, partnership,
2.18limited partnership, joint venture, association, trust, estate, enterprise, or other legal or
2.19commercial entity.
2.20 Subd. 7. Public benefit corporation. "Public benefit corporation" means a
2.21corporation formed under chapter 302A:
2.22(1) that has elected to become subject to this chapter; and
2.23(2) whose status as a public benefit corporation has not been terminated or revoked.
2.24 Subd. 8. Specific benefit corporation. "Specific benefit corporation" means a
2.25public benefit corporation that states in its articles a specific public benefit purpose it elects
2.26to pursue, but does not include a general benefit corporation that states in its articles a
2.27specific public benefit purpose it elects to pursue.
2.28 Subd. 9. Specific public benefit. "Specific public benefit" means one or more
2.29positive impacts, or reduction of a negative impact, on specified categories of natural
2.30persons, entities, communities, or interests, other than shareholders in their capacity as
2.31shareholders, as enumerated in the articles of a public benefit corporation.
2.32 Subd. 10. Third-party standard. "Third-party standard" means:
2.33(1) a publicly available standard or guideline for defining, reporting, and assessing
2.34the performance of a business enterprise as a social or benefit corporation;
2.35(2) promulgated by a natural person or an organization; and
2.36(3) that is independent of the public benefit corporation.
3.2 Sec. 4. [304A.101] INCORPORATION OF A PUBLIC BENEFIT
3.3CORPORATION.
3.4 Subdivision 1. Incorporation. A public benefit corporation must be incorporated
3.5in accordance with chapter 302A, and its articles must also state that the public benefit
3.6corporation is a:
3.7(1) general benefit corporation;
3.8(2) general benefit corporation that also elects to pursue a specific public benefit
3.9purpose as stated in its articles; or
3.10(3) a specific benefit corporation that elects to pursue a specific public benefit
3.11purpose as stated in its articles.
3.12 Subd. 2. Name requirements. A public benefit corporation name must comply
3.13with the requirements of section 302A.115 other than subdivision 1, paragraph (b), and
3.14with respect to:
3.15(1) a general benefit corporation, contain the words "general benefit corporation,"
3.16or the abbreviation "GBC;" and
3.17(2) a specific benefit corporation, contain the words "specific benefit corporation," or
3.18the abbreviation "SBC."
3.19 Sec. 5. [304A.102] ELECTION OF PUBLIC BENEFIT CORPORATION
3.20STATUS.
3.21 Subdivision 1. By amendment. In accordance with the procedures stated in chapter
3.22302A and with approval by the minimum status vote, an existing corporation formed
3.23under chapter 302A may elect to become a public benefit corporation under this chapter
3.24by amending its articles to meet the requirements of section 304A.101.
3.25 Subd. 2. By merger, exchange, conversion, or transfer. (a) This subdivision
3.26applies if:
3.27(1) an organization, other than a nonprofit corporation, that is not a public benefit
3.28corporation is a party to a merger, exchange, or conversion, or a transfer in accordance
3.29with section 302A.601; and
3.30(2) the surviving organization in the merger, the acquiring organization in an
3.31exchange, the converted organization in the conversion, or the transferee is to be a public
3.32benefit corporation.
4.1(b) If this subdivision applies, the transfer or the plan of merger, exchange, or
4.2conversion, must be adopted in accordance with the procedures stated in chapter 302A
4.3and with approval by the minimum status vote.
4.4 Subd. 3. Rights of dissenting shareholders. A shareholder of a corporation or the
4.5member of a limited liability company may dissent from, and obtain payment for the
4.6fair value of the shareholder's shares or the member's membership interests pursuant to
4.7sections 302A.471 and 302A.473, or section 322B.383 or 322B.386, in the event of an
4.8election of public benefit corporation status pursuant to this section.
4.9 Sec. 6. [304A.103] TERMINATION OF PUBLIC BENEFIT CORPORATION
4.10STATUS.
4.11 Subdivision 1. By amendment. In accordance with the procedures stated in chapter
4.12302A and with approval by the minimum status vote, a public benefit corporation may
4.13terminate its status as a public benefit corporation and cease to be subject to this chapter by
4.14amending its articles to delete the requirements of section 304A.101, subdivision 1, and
4.15change its name to remove the information required by section 304A.101, subdivision 2.
4.16 Subd. 2. Merger, exchange, conversion, or transfer. If a merger, exchange,
4.17conversion, or transfer would have the effect of terminating the status of a public benefit
4.18corporation under this chapter, the transfer or the plan of merger, exchange, or conversion
4.19must be approved by the minimum status vote.
4.20 Subd. 3. Rights of dissenting shareholders. A shareholder of a public benefit
4.21corporation may dissent from, and obtain payment for the fair value of the shareholder's
4.22shares pursuant to sections 302A.471 and 302A.473 in the event of a termination of public
4.23benefit corporation status pursuant to this section.
4.24 Subd. 4. Effects of termination. A public benefit corporation that terminates its
4.25status, or has its status revoked more than once pursuant to section 304A.301, subdivision
4.265, may not elect to become a public benefit corporation under this chapter until three years
4.27have passed since the effective date of termination or revocation.
4.28 Sec. 7. [304A.104] PUBLIC BENEFIT CORPORATION PURPOSES.
4.29 Subdivision 1. General benefit corporation purpose. A general benefit corporation
4.30has a purpose of pursuing general public benefit. A general benefit corporation may
4.31also state in its articles one or more specific public benefit purposes the general benefit
4.32corporation elects to pursue. Purposes under these subdivisions are in addition to the
4.33purposes under section 302A.101.
5.1 Subd. 2. Specific benefit corporation purpose. A specific benefit corporation shall
5.2have a purpose of pursuing one or more specific public benefit purposes stated in its articles.
5.3Purposes under this subdivision are in addition to the purposes under section 302A.101.
5.4The election to pursue a specific public benefit purpose under this subdivision does not
5.5require a specific benefit corporation to pursue general public benefit under subdivision 1.
5.6 Subd. 3. Effect of purposes. The pursuit of general public benefit or a specific
5.7public benefit purpose under subdivision 1, or a specific public benefit purpose under
5.8subdivision 2, is in the best interests of a public benefit corporation.
5.9 Subd. 4. Amendment of a specific public benefit purpose. In accordance with
5.10the procedures stated in chapter 302A and with approval by the minimum status vote, a
5.11general benefit corporation or a specific benefit corporation may amend its articles to add,
5.12amend, or delete a specific public benefit purpose unless the amendment would cause a
5.13termination of public benefit corporation status under section 304A.103.
5.15 Sec. 8. [304A.201] STANDARD OF CONDUCT FOR DIRECTORS.
5.16 Subdivision 1. Considerations for a general benefit corporation. In discharging
5.17the duties of the position of director of a general benefit corporation, a director:
5.18(1) shall consider the effects of any proposed, contemplated, or actual conduct on:
5.19(i) the general benefit corporation's ability to pursue general public benefit;
5.20(ii) if the articles also state a specific public benefit purpose, the general benefit
5.21corporation's ability to pursue its specific public benefit; and
5.22(iii) the interests of the constituencies stated in section 302A.251, subdivision 5,
5.23including the pecuniary interests of its shareholders; and
5.24(2) may not give regular, presumptive, or permanent priority to:
5.25(i) the pecuniary interests of the shareholders; or
5.26(ii) any other interest or consideration unless the articles identify the interest or
5.27consideration as having priority.
5.28 Subd. 2. Considerations for a specific benefit corporation. In discharging the
5.29duties of the position of director of a specific benefit corporation, a director:
5.30(1) shall consider the effects of any proposed, contemplated, or actual conduct on:
5.31(i) the pecuniary interest of its shareholders; and
5.32(ii) the specific benefit corporation's ability to pursue its specific public benefit
5.33purpose;
5.34(2) may consider the interests of the constituencies stated in section 302A.251,
5.35subdivision 5; and
6.1(3) may not give regular, presumptive, or permanent priority to:
6.2(i) the pecuniary interests of the shareholders; or
6.3(ii) any other interest or consideration unless the articles identify the interest or
6.4consideration as having priority.
6.5 Subd. 3. Liability. A director who performs the duties of a director stated in
6.6subdivisions 1 and 2 is not liable by reason of being or having been a director of a public
6.7benefit corporation.
6.8 Subd. 4. Other applicable law. The conduct and liability of a director of a public
6.9benefit corporation is subject to section 302A.251, subdivisions 1, 2, 3, and 4.
6.10 Subd. 5. Duty of loyalty. The articles of a public benefit corporation may include a
6.11provision that any disinterested failure to satisfy subdivision 1 or 2 of this section shall
6.12not, for purposes of this section or section 302A.251, subdivision 4, constitute a breach of
6.13the duty of loyalty.
6.14 Sec. 9. [304A.202] RIGHT OF ACTION.
6.15 Subdivision 1. Standing and grounds for claims. (a) No person other than a
6.16shareholder may assert a claim under this chapter or chapter 302A against a public benefit
6.17corporation, its directors, or its officers on account of the public benefit corporation's
6.18director's or officer's failure to pursue or create general public benefit or a specific public
6.19benefit.
6.20(b) A public benefit corporation is not liable for monetary damages under this
6.21chapter for any failure of the public benefit corporation to pursue or create general public
6.22benefit or a specific public benefit.
6.23 Subd. 2. Grounds for relief. In addition to the grounds for relief stated in section
6.24302A.751, subdivision 1, paragraph (b), a court may grant relief under this chapter when:
6.25(1) directors or those in control of a public benefit corporation have breached the
6.26duties stated in section 304A.201 to a substantial extent and in a sustained manner; or
6.27(2) the public benefit corporation has for an unreasonably long period of time failed
6.28to pursue:
6.29(i) in the case of a general benefit corporation:
6.30(A) general public benefit; or
6.31(B) any specific public benefit purpose stated in its articles; and
6.32(ii) in the case of a specific benefit corporation, any specific public benefit purpose
6.33stated in its articles.
7.1 Subd. 3. Particular relief available. (a) In an action under this chapter, in
7.2addition to granting any other equitable relief the court deems just and reasonable in
7.3the circumstances, the court may:
7.4(1) order the public benefit corporation to terminate its status as a public benefit
7.5corporation pursuant to section 304A.103, subdivision 1;
7.6(2) remove one or more directors from the public benefit corporation's board of
7.7directors and determine whether the vacancy will be filled:
7.8(i) as provided in section 302A.225; or
7.9(ii) by court appointment, with the appointee to serve only until a qualified successor
7.10is elected by the shareholders at the next regular or special meeting of the shareholders;
7.11(3) appoint a receiver of the public benefit corporation to:
7.12(i) wind up and liquidate the activities and business of the public benefit corporation;
7.13or
7.14(ii) carry on the business and activities of the public benefit corporation in a manner
7.15consistent with this chapter.
7.16(b) Paragraph (a) does not imply any limitations on the relief available in a
7.17proceeding brought under section 302A.751 without reference to this chapter.
7.19 Sec. 10. [304A.301] ANNUAL BENEFIT REPORT.
7.20 Subdivision 1. Report required. No later than 90 days after the conclusion of each
7.21calendar year, a public benefit corporation must deliver to the secretary of state for filing
7.22an annual benefit report covering the 12-month period ending on December 31 of that year
7.23and pay a fee of $35 to the secretary of state. The annual benefit report must state the
7.24name of the public benefit corporation, be signed by the public benefit corporation's chief
7.25executive officer not more than 30 days before the report is delivered to the secretary of
7.26state for filing, and must be current when signed.
7.27 Subd. 2. Annual benefit report for a specific benefit corporation. For a specific
7.28benefit corporation, the annual benefit report must contain:
7.29(1) with regard to the period covered by the report, a narrative description of:
7.30(i) the ways in which the corporation pursued and created the specific public benefit
7.31stated in its articles;
7.32(ii) the extent to which that specific public benefit purpose was pursued and created;
7.33and
7.34(iii) any circumstances that hindered efforts to pursue or create the specific public
7.35benefit; and
8.1(2) a certification that its board of directors has reviewed and approved the report.
8.2 Subd. 3. Annual benefit report for a general benefit corporation. The annual
8.3benefit report of a general benefit corporation must:
8.4(1) certify that its board of directors has:
8.5(i) chosen the third-party standard designated pursuant to clause (2), item (i);
8.6(ii) determined that the organization that promulgated the third-party standard
8.7is independent; and
8.8(iii) approved the report;
8.9(2) with regard to the period covered by the report:
8.10(i) identify a third-party standard determined by the board; and
8.11(ii) with reference to that third-party standard, describe:
8.12(A) how the corporation has pursued general public benefit;
8.13(B) the extent to which and the ways in which the corporation has created general
8.14public benefit; and
8.15(C) any circumstances that hindered efforts to pursue or create general public benefit;
8.16(3) if the report is the first delivered for filing by the general benefit corporation,
8.17explain how and why the board chose the third-party standard identified under clause (2),
8.18item (i);
8.19(4) if the third-party standard identified under clause (2), item (i), is the same
8.20third-party standard identified in the immediately prior report:
8.21(i) state whether the third-party standard is being applied in a manner consistent with
8.22the third-party standard's application in the prior reports; and
8.23(ii) if the third-party standard is not being so applied in a consistent manner, explain
8.24why;
8.25(5) if the third-party standard identified under clause (2), item (i), is not the same as
8.26the third-party standard identified in the immediately prior report, explain how and why
8.27the board chose a different third-party standard; and
8.28(6) if the general benefit corporation has also stated a specific public benefit purpose
8.29in its articles, the information required in subdivision 2, clause (1).
8.30 Subd. 4. Audit not required. A public benefit corporation is not required to have
8.31its annual benefit report audited, certified, or otherwise evaluated by a third party.
8.32 Subd. 5. Failure to file an annual benefit report. If a public benefit corporation
8.33fails to file an annual benefit report in accordance with this section within 90 days of
8.34the date on which an annual benefit report is due, the secretary of state shall revoke the
8.35corporation's status as a public benefit corporation under this chapter and must notify
9.1the public benefit corporation of the revocation using the information provided by the
9.2corporation pursuant to section 5.002 or 5.34 or provided in the articles.
9.3 Subd. 6. Effects of revocation; reinstatement. (a) A public benefit corporation
9.4that has lost its public benefit corporation status for failure to timely file an annual benefit
9.5report is not entitled to the benefits afforded to a public benefit corporation under this
9.6chapter as of the date of revocation.
9.7(b) Within 30 days of issuance of revocation of public benefit corporation status by
9.8the secretary of state, filing a renewal complying with this section and a $500 fee with
9.9the secretary of state will reinstate the corporation as a public benefit corporation under
9.10this chapter as of the date of revocation.
9.11 Subd. 7. Intentional failure to file an annual benefit report. A shareholder of the
9.12public benefit corporation may obtain payment for the fair value of the shareholder's shares
9.13pursuant to section 302A.473 as a result of revocation of public benefit corporation status
9.14pursuant to this section caused by the intentional failure to file an annual benefit report.
9.15 Sec. 11. EFFECTIVE DATE.
9.16Sections 1 to 10 are effective January 1, 2015.
1.3benefit corporations;proposing coding for new law as Minnesota Statutes,
1.4chapter 304A.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. [304A.001] CITATION.
1.7This chapter may be cited as the "Minnesota Public Benefit Corporation Act."
1.9 Sec. 2. [304A.011] APPLICATION AND EFFECT OF CHAPTER.
1.10 Subdivision 1. General rule. This chapter applies to all public benefit corporations.
1.11 Subd. 2. Laws applicable. Chapter 302A applies to all public benefit corporations
1.12and all statutes and rules of law that apply to a corporation formed under chapter 302A
1.13also apply to a public benefit corporation. If chapter 302A conflicts with sections
1.14304A.001 to 304A.301, sections 304A.001 to 304A.301 govern. The chapter does not
1.15affect a statute or rule of law that applies to a corporation formed under chapter 302A that
1.16is not a public benefit corporation.
1.17 Subd. 3. Chapter not to be varied. A provision of the articles, shareholder control
1.18agreement, or bylaws of a public benefit corporation may not limit, be inconsistent with,
1.19or supersede a provision of this chapter.
1.20 Sec. 3. [304A.021] DEFINITIONS.
2.1 Subdivision 1. Terms. For the purposes of this chapter, unless the language or
2.2context clearly indicates that a different meaning is intended, the words, terms, and
2.3phrases defined in this section have the meanings given them.
2.4 Subd. 2. General benefit corporation. "General benefit corporation" means a
2.5public benefit corporation that elects in its articles to pursue general public benefit and that
2.6may state in its articles a specific public benefit purpose it elects to pursue.
2.7 Subd. 3. General public benefit. "General public benefit" means a net material
2.8positive impact from the business and operations of a general benefit corporation on
2.9society, the environment, and the well-being of present and future generations.
2.10 Subd. 4. Independent. "Independent" means having no material relationship
2.11with a public benefit corporation or a parent, a subsidiary, or other affiliate of a public
2.12benefit corporation.
2.13 Subd. 5. Minimum status vote. "Minimum status vote" means that the shareholders
2.14shall take action by the affirmative vote of the holders of at least two-thirds of all of
2.15the issued and outstanding shares.
2.16 Subd. 6. Organization. "Organization" means a domestic or foreign business or
2.17nonprofit corporation, limited liability company, whether domestic or foreign, partnership,
2.18limited partnership, joint venture, association, trust, estate, enterprise, or other legal or
2.19commercial entity.
2.20 Subd. 7. Public benefit corporation. "Public benefit corporation" means a
2.21corporation formed under chapter 302A:
2.22(1) that has elected to become subject to this chapter; and
2.23(2) whose status as a public benefit corporation has not been terminated or revoked.
2.24 Subd. 8. Specific benefit corporation. "Specific benefit corporation" means a
2.25public benefit corporation that states in its articles a specific public benefit purpose it elects
2.26to pursue, but does not include a general benefit corporation that states in its articles a
2.27specific public benefit purpose it elects to pursue.
2.28 Subd. 9. Specific public benefit. "Specific public benefit" means one or more
2.29positive impacts, or reduction of a negative impact, on specified categories of natural
2.30persons, entities, communities, or interests, other than shareholders in their capacity as
2.31shareholders, as enumerated in the articles of a public benefit corporation.
2.32 Subd. 10. Third-party standard. "Third-party standard" means:
2.33(1) a publicly available standard or guideline for defining, reporting, and assessing
2.34the performance of a business enterprise as a social or benefit corporation;
2.35(2) promulgated by a natural person or an organization; and
2.36(3) that is independent of the public benefit corporation.
3.2 Sec. 4. [304A.101] INCORPORATION OF A PUBLIC BENEFIT
3.3CORPORATION.
3.4 Subdivision 1. Incorporation. A public benefit corporation must be incorporated
3.5in accordance with chapter 302A, and its articles must also state that the public benefit
3.6corporation is a:
3.7(1) general benefit corporation;
3.8(2) general benefit corporation that also elects to pursue a specific public benefit
3.9purpose as stated in its articles; or
3.10(3) a specific benefit corporation that elects to pursue a specific public benefit
3.11purpose as stated in its articles.
3.12 Subd. 2. Name requirements. A public benefit corporation name must comply
3.13with the requirements of section 302A.115 other than subdivision 1, paragraph (b), and
3.14with respect to:
3.15(1) a general benefit corporation, contain the words "general benefit corporation,"
3.16or the abbreviation "GBC;" and
3.17(2) a specific benefit corporation, contain the words "specific benefit corporation," or
3.18the abbreviation "SBC."
3.19 Sec. 5. [304A.102] ELECTION OF PUBLIC BENEFIT CORPORATION
3.20STATUS.
3.21 Subdivision 1. By amendment. In accordance with the procedures stated in chapter
3.22302A and with approval by the minimum status vote, an existing corporation formed
3.23under chapter 302A may elect to become a public benefit corporation under this chapter
3.24by amending its articles to meet the requirements of section 304A.101.
3.25 Subd. 2. By merger, exchange, conversion, or transfer. (a) This subdivision
3.26applies if:
3.27(1) an organization, other than a nonprofit corporation, that is not a public benefit
3.28corporation is a party to a merger, exchange, or conversion, or a transfer in accordance
3.29with section 302A.601; and
3.30(2) the surviving organization in the merger, the acquiring organization in an
3.31exchange, the converted organization in the conversion, or the transferee is to be a public
3.32benefit corporation.
4.1(b) If this subdivision applies, the transfer or the plan of merger, exchange, or
4.2conversion, must be adopted in accordance with the procedures stated in chapter 302A
4.3and with approval by the minimum status vote.
4.4 Subd. 3. Rights of dissenting shareholders. A shareholder of a corporation or the
4.5member of a limited liability company may dissent from, and obtain payment for the
4.6fair value of the shareholder's shares or the member's membership interests pursuant to
4.7sections 302A.471 and 302A.473, or section 322B.383 or 322B.386, in the event of an
4.8election of public benefit corporation status pursuant to this section.
4.9 Sec. 6. [304A.103] TERMINATION OF PUBLIC BENEFIT CORPORATION
4.10STATUS.
4.11 Subdivision 1. By amendment. In accordance with the procedures stated in chapter
4.12302A and with approval by the minimum status vote, a public benefit corporation may
4.13terminate its status as a public benefit corporation and cease to be subject to this chapter by
4.14amending its articles to delete the requirements of section 304A.101, subdivision 1, and
4.15change its name to remove the information required by section 304A.101, subdivision 2.
4.16 Subd. 2. Merger, exchange, conversion, or transfer. If a merger, exchange,
4.17conversion, or transfer would have the effect of terminating the status of a public benefit
4.18corporation under this chapter, the transfer or the plan of merger, exchange, or conversion
4.19must be approved by the minimum status vote.
4.20 Subd. 3. Rights of dissenting shareholders. A shareholder of a public benefit
4.21corporation may dissent from, and obtain payment for the fair value of the shareholder's
4.22shares pursuant to sections 302A.471 and 302A.473 in the event of a termination of public
4.23benefit corporation status pursuant to this section.
4.24 Subd. 4. Effects of termination. A public benefit corporation that terminates its
4.25status, or has its status revoked more than once pursuant to section 304A.301, subdivision
4.265, may not elect to become a public benefit corporation under this chapter until three years
4.27have passed since the effective date of termination or revocation.
4.28 Sec. 7. [304A.104] PUBLIC BENEFIT CORPORATION PURPOSES.
4.29 Subdivision 1. General benefit corporation purpose. A general benefit corporation
4.30has a purpose of pursuing general public benefit. A general benefit corporation may
4.31also state in its articles one or more specific public benefit purposes the general benefit
4.32corporation elects to pursue. Purposes under these subdivisions are in addition to the
4.33purposes under section 302A.101.
5.1 Subd. 2. Specific benefit corporation purpose. A specific benefit corporation shall
5.2have a purpose of pursuing one or more specific public benefit purposes stated in its articles.
5.3Purposes under this subdivision are in addition to the purposes under section 302A.101.
5.4The election to pursue a specific public benefit purpose under this subdivision does not
5.5require a specific benefit corporation to pursue general public benefit under subdivision 1.
5.6 Subd. 3. Effect of purposes. The pursuit of general public benefit or a specific
5.7public benefit purpose under subdivision 1, or a specific public benefit purpose under
5.8subdivision 2, is in the best interests of a public benefit corporation.
5.9 Subd. 4. Amendment of a specific public benefit purpose. In accordance with
5.10the procedures stated in chapter 302A and with approval by the minimum status vote, a
5.11general benefit corporation or a specific benefit corporation may amend its articles to add,
5.12amend, or delete a specific public benefit purpose unless the amendment would cause a
5.13termination of public benefit corporation status under section 304A.103.
5.15 Sec. 8. [304A.201] STANDARD OF CONDUCT FOR DIRECTORS.
5.16 Subdivision 1. Considerations for a general benefit corporation. In discharging
5.17the duties of the position of director of a general benefit corporation, a director:
5.18(1) shall consider the effects of any proposed, contemplated, or actual conduct on:
5.19(i) the general benefit corporation's ability to pursue general public benefit;
5.20(ii) if the articles also state a specific public benefit purpose, the general benefit
5.21corporation's ability to pursue its specific public benefit; and
5.22(iii) the interests of the constituencies stated in section 302A.251, subdivision 5,
5.23including the pecuniary interests of its shareholders; and
5.24(2) may not give regular, presumptive, or permanent priority to:
5.25(i) the pecuniary interests of the shareholders; or
5.26(ii) any other interest or consideration unless the articles identify the interest or
5.27consideration as having priority.
5.28 Subd. 2. Considerations for a specific benefit corporation. In discharging the
5.29duties of the position of director of a specific benefit corporation, a director:
5.30(1) shall consider the effects of any proposed, contemplated, or actual conduct on:
5.31(i) the pecuniary interest of its shareholders; and
5.32(ii) the specific benefit corporation's ability to pursue its specific public benefit
5.33purpose;
5.34(2) may consider the interests of the constituencies stated in section 302A.251,
5.35subdivision 5; and
6.1(3) may not give regular, presumptive, or permanent priority to:
6.2(i) the pecuniary interests of the shareholders; or
6.3(ii) any other interest or consideration unless the articles identify the interest or
6.4consideration as having priority.
6.5 Subd. 3. Liability. A director who performs the duties of a director stated in
6.6subdivisions 1 and 2 is not liable by reason of being or having been a director of a public
6.7benefit corporation.
6.8 Subd. 4. Other applicable law. The conduct and liability of a director of a public
6.9benefit corporation is subject to section 302A.251, subdivisions 1, 2, 3, and 4.
6.10 Subd. 5. Duty of loyalty. The articles of a public benefit corporation may include a
6.11provision that any disinterested failure to satisfy subdivision 1 or 2 of this section shall
6.12not, for purposes of this section or section 302A.251, subdivision 4, constitute a breach of
6.13the duty of loyalty.
6.14 Sec. 9. [304A.202] RIGHT OF ACTION.
6.15 Subdivision 1. Standing and grounds for claims. (a) No person other than a
6.16shareholder may assert a claim under this chapter or chapter 302A against a public benefit
6.17corporation, its directors, or its officers on account of the public benefit corporation's
6.18director's or officer's failure to pursue or create general public benefit or a specific public
6.19benefit.
6.20(b) A public benefit corporation is not liable for monetary damages under this
6.21chapter for any failure of the public benefit corporation to pursue or create general public
6.22benefit or a specific public benefit.
6.23 Subd. 2. Grounds for relief. In addition to the grounds for relief stated in section
6.24302A.751, subdivision 1, paragraph (b), a court may grant relief under this chapter when:
6.25(1) directors or those in control of a public benefit corporation have breached the
6.26duties stated in section 304A.201 to a substantial extent and in a sustained manner; or
6.27(2) the public benefit corporation has for an unreasonably long period of time failed
6.28to pursue:
6.29(i) in the case of a general benefit corporation:
6.30(A) general public benefit; or
6.31(B) any specific public benefit purpose stated in its articles; and
6.32(ii) in the case of a specific benefit corporation, any specific public benefit purpose
6.33stated in its articles.
7.1 Subd. 3. Particular relief available. (a) In an action under this chapter, in
7.2addition to granting any other equitable relief the court deems just and reasonable in
7.3the circumstances, the court may:
7.4(1) order the public benefit corporation to terminate its status as a public benefit
7.5corporation pursuant to section 304A.103, subdivision 1;
7.6(2) remove one or more directors from the public benefit corporation's board of
7.7directors and determine whether the vacancy will be filled:
7.8(i) as provided in section 302A.225; or
7.9(ii) by court appointment, with the appointee to serve only until a qualified successor
7.10is elected by the shareholders at the next regular or special meeting of the shareholders;
7.11(3) appoint a receiver of the public benefit corporation to:
7.12(i) wind up and liquidate the activities and business of the public benefit corporation;
7.13or
7.14(ii) carry on the business and activities of the public benefit corporation in a manner
7.15consistent with this chapter.
7.16(b) Paragraph (a) does not imply any limitations on the relief available in a
7.17proceeding brought under section 302A.751 without reference to this chapter.
7.19 Sec. 10. [304A.301] ANNUAL BENEFIT REPORT.
7.20 Subdivision 1. Report required. No later than 90 days after the conclusion of each
7.21calendar year, a public benefit corporation must deliver to the secretary of state for filing
7.22an annual benefit report covering the 12-month period ending on December 31 of that year
7.23and pay a fee of $35 to the secretary of state. The annual benefit report must state the
7.24name of the public benefit corporation, be signed by the public benefit corporation's chief
7.25executive officer not more than 30 days before the report is delivered to the secretary of
7.26state for filing, and must be current when signed.
7.27 Subd. 2. Annual benefit report for a specific benefit corporation. For a specific
7.28benefit corporation, the annual benefit report must contain:
7.29(1) with regard to the period covered by the report, a narrative description of:
7.30(i) the ways in which the corporation pursued and created the specific public benefit
7.31stated in its articles;
7.32(ii) the extent to which that specific public benefit purpose was pursued and created;
7.33and
7.34(iii) any circumstances that hindered efforts to pursue or create the specific public
7.35benefit; and
8.1(2) a certification that its board of directors has reviewed and approved the report.
8.2 Subd. 3. Annual benefit report for a general benefit corporation. The annual
8.3benefit report of a general benefit corporation must:
8.4(1) certify that its board of directors has:
8.5(i) chosen the third-party standard designated pursuant to clause (2), item (i);
8.6(ii) determined that the organization that promulgated the third-party standard
8.7is independent; and
8.8(iii) approved the report;
8.9(2) with regard to the period covered by the report:
8.10(i) identify a third-party standard determined by the board; and
8.11(ii) with reference to that third-party standard, describe:
8.12(A) how the corporation has pursued general public benefit;
8.13(B) the extent to which and the ways in which the corporation has created general
8.14public benefit; and
8.15(C) any circumstances that hindered efforts to pursue or create general public benefit;
8.16(3) if the report is the first delivered for filing by the general benefit corporation,
8.17explain how and why the board chose the third-party standard identified under clause (2),
8.18item (i);
8.19(4) if the third-party standard identified under clause (2), item (i), is the same
8.20third-party standard identified in the immediately prior report:
8.21(i) state whether the third-party standard is being applied in a manner consistent with
8.22the third-party standard's application in the prior reports; and
8.23(ii) if the third-party standard is not being so applied in a consistent manner, explain
8.24why;
8.25(5) if the third-party standard identified under clause (2), item (i), is not the same as
8.26the third-party standard identified in the immediately prior report, explain how and why
8.27the board chose a different third-party standard; and
8.28(6) if the general benefit corporation has also stated a specific public benefit purpose
8.29in its articles, the information required in subdivision 2, clause (1).
8.30 Subd. 4. Audit not required. A public benefit corporation is not required to have
8.31its annual benefit report audited, certified, or otherwise evaluated by a third party.
8.32 Subd. 5. Failure to file an annual benefit report. If a public benefit corporation
8.33fails to file an annual benefit report in accordance with this section within 90 days of
8.34the date on which an annual benefit report is due, the secretary of state shall revoke the
8.35corporation's status as a public benefit corporation under this chapter and must notify
9.1the public benefit corporation of the revocation using the information provided by the
9.2corporation pursuant to section 5.002 or 5.34 or provided in the articles.
9.3 Subd. 6. Effects of revocation; reinstatement. (a) A public benefit corporation
9.4that has lost its public benefit corporation status for failure to timely file an annual benefit
9.5report is not entitled to the benefits afforded to a public benefit corporation under this
9.6chapter as of the date of revocation.
9.7(b) Within 30 days of issuance of revocation of public benefit corporation status by
9.8the secretary of state, filing a renewal complying with this section and a $500 fee with
9.9the secretary of state will reinstate the corporation as a public benefit corporation under
9.10this chapter as of the date of revocation.
9.11 Subd. 7. Intentional failure to file an annual benefit report. A shareholder of the
9.12public benefit corporation may obtain payment for the fair value of the shareholder's shares
9.13pursuant to section 302A.473 as a result of revocation of public benefit corporation status
9.14pursuant to this section caused by the intentional failure to file an annual benefit report.
9.15 Sec. 11. EFFECTIVE DATE.
9.16Sections 1 to 10 are effective January 1, 2015.
