S6088-2011 - NY Senate Open Legislation - Relates to the incorporation of benefit corporations and standards of conduct of directors and officers of benefit corporations

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

Sponsor: SQUADRON / Co-sponsor(s): LARKIN / Committee: RULES
Law Section: General Construction Law / Law: Amd S66, Gen Con L; amd SS1702 - 1705, BC L

S6088-2011 Actions

Jun 21, 2012: COMMITTED TO RULES
Jun 5, 2012: ADVANCED TO THIRD READING
Jun 4, 2012: 2ND REPORT CAL.
May 31, 2012: 1ST REPORT CAL.984
Jan 4, 2012: REFERRED TO JUDICIARY

S6088-2011 Meetings

Judiciary: May 31, 2012

S6088-2011 Calendars

Floor Calendar: Jun 4, 2012 , Floor Calendar: Jun 5, 2012 , Floor Calendar: Jun 6, 2012 , Floor Calendar: Jun 11, 2012 , Floor Calendar: Jun 12, 2012 , Floor Calendar: Jun 13, 2012 , Floor Calendar: Jun 14, 2012 , Floor Calendar: Jun 18, 2012 , Floor Calendar: Jun 19, 2012 , Floor Calendar: Jun 20, 2012 , Floor Calendar: Jun 21, 2012

S6088-2011 Votes

VOTE: COMMITTEE VOTE: - Judiciary - May 31, 2012

Ayes (19): Bonacic, Flanagan, Fuschillo, Lanza, Little, Nozzolio, O'Mara, Ranzenhofer, Saland, Zeldin, Adams, Breslin, Dilan, Espaillat, Gianaris, Krueger, Perkins, Serrano, Squadron
Ayes W/R (2): DeFrancisco, LaValle
Excused (2): Hassell-Thompson, Stavisky

S6088-2011 Memo

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.

S6088-2011 Text

 S T A T E   O F   N E W   Y O R K
 
 S. 6088                                                  A. 8907
 SENATE - ASSEMBLY
 (PREFILED)
 January 4, 2012
 
 IN  SENATE  --  Introduced  by  Sens. SQUADRON, LARKIN -- read twice and
 ordered printed, and when printed to be committed to the Committee  on
 Judiciary
 IN  ASSEMBLY  -- Introduced by M. of A. SILVER -- read once and referred
 to the Committee on Corporations, Authorities and Commissions
 

AN ACT to amend the general construction law  and  the  business  corpo
 ration law, in relation to benefit corporations
 

THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM
 BLY, DO ENACT AS FOLLOWS:

 

Section 1. Subdivision 4-a of section 66 of the  general  construction
 law,  as added by chapter 599 of the laws of 2011, is amended to read as
 follows:

 4-a. A "benefit corporation" means a business corporation incorporated
 under article [seventeen] FOUR of  the  business  corporation  law  [and
 whose  status  as  a  benefit  corporation  has  not  been terminated as
 provided in article seventeen of the business corporation law] THAT  WAS
 FORMED  AS  A  BENEFIT  CORPORATION  OR  HAS ELECTED TO BECOME A BENEFIT
 CORPORATION AS PROVIDED IN ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION
 LAW UNTIL SUCH TIME AS IT HAS CEASED TO  BE  A  BENEFIT  CORPORATION  AS
 PROVIDED IN ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION LAW.
 

S  2.  Paragraphs  (a)  and (d) of section 1702 of the business corpo
 ration law, as added by chapter 599 of the laws of 2011, are amended  to
 read as follows:

 (a)  "Benefit  corporation"  means a business corporation incorporated
 under [this article and whose status as a benefit  corporation  has  not
 been  terminated as provided in this article] ARTICLE FOUR OF THIS CHAP
 TER THAT WAS FORMED AS A BENEFIT CORPORATION OR HAS ELECTED TO BECOME  A
 BENEFIT  CORPORATION  AS  PROVIDED IN THIS ARTICLE UNTIL SUCH TIME AS IT
 HAS CEASED TO BE A BENEFIT CORPORATION AS PROVIDED IN THIS ARTICLE.
 (d) "Minimum status  vote"  means  that,  in  addition  to  any  other
 approval  or  vote required by this chapter, the certificate of incorpo
 ration or a bylaw adopted by the shareholders, THE HIGHER OF:

 (1) [The holders of shares of every class or series that are  entitled
 to  vote on the corporate action shall be entitled to vote as a class on
 the corporate action; and
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD13863-01-1
        S. 6088                             2                            A. 8907
 (2) The corporate action must be approved by vote of the  shareholders
 of  each class or series entitled to cast at least three-quarters of the
 votes that all shareholders of the class or series are entitled to  cast
 thereon] THE VOTE REQUIRED BY THE CERTIFICATE OF INCORPORATION; OR
 (2)  TWO-THIRDS  OF  THE  VOTES ENTITLED TO BE CAST BY THE OUTSTANDING
 SHARES OF THE CORPORATION, PROVIDED THAT IF ANY CLASS OF SHARES IS ENTI
 TLED TO VOTE AS A GROUP, APPROVAL SHALL  ALSO  REQUIRE  THE  AFFIRMATIVE
 VOTE  OF  THE HOLDERS OF AT LEAST TWO-THIRDS OF THE VOTES ENTITLED TO BE
 CAST BY THE OUTSTANDING SHARES OF EACH VOTING GROUP.
 

S 3.

Section 1703 of the business corporation law, as added by chapter
 599 of the laws of 2011, is amended to read as follows:

 

S 1703. Formation of benefit corporations.
 A benefit corporation shall be [formed in accordance with this chapter
 except that] INCORPORATED UNDER ARTICLE FOUR OF THIS CHAPTER, IN ACCORD
 ANCE WITH THE PROVISIONS OF THIS ARTICLE, AND its certificate of  incor
 poration shall also state that it is a benefit corporation.
 

S  4.  Paragraphs  (a)  and (b) of section 1704 of the business corpo
 ration law, as added by chapter 599 of the laws of 2011, are amended  to
 read as follows:

 (a) A business corporation may become a benefit corporation under this
 article by amending its certificate of incorporation so that it contains
 a  statement  that  the corporation is a benefit corporation. [The] SUCH
 amendment shall [not] be [effective unless it is] adopted  by  at  least
 the minimum status vote.
 (b)  Any corporation that is not a benefit corporation that is a party
 to a merger or consolidation in which  [the  surviving  or  consolidated
 corporation  will be a benefit corporation] SUCH CORPORATION WILL BECOME
 A BENEFIT CORPORATION must approve the plan of merger  or  consolidation
 by  at  least  the  minimum  status  vote  in addition to any other vote
 required by this  chapter,  the  certificate  of  incorporation  or  the
 bylaws.
 

S  5.  Paragraphs  (a),  (b)  and  (d) of section 1705 of the business
 corporation law, as added by chapter  599  of  the  laws  of  2011,  are
 amended to read as follows:

 (a)  A  benefit corporation may terminate its status as such and cease
 to be subject to this article by amending its  certificate  of  incorpo
 ration  to delete the statement that the corporation is a benefit corpo
 ration. [The] SUCH amendment shall [not] be  [effective  unless  it  is]
 adopted by at least the minimum status vote.
 (b)  [If  a]  ANY  benefit  corporation THAT is a party to a merger or
 consolidation in which [the surviving or new corporation  will  not  be]
 SUCH  CORPORATION WILL NO LONGER BE a benefit corporation[,] AS A RESULT
 OF THE TRANSACTION, MUST APPROVE the plan  of  merger  or  consolidation
 [shall  not  be  effective unless it is adopted] by at least the minimum
 status vote in addition to any other vote required by this chapter,  the
 certificate of incorporation or the bylaws.
 (d)  A  sale, lease, conveyance, exchange, transfer, or other disposi
 tion of all or substantially all of the assets of a benefit corporation,
 [unless the transaction is in the usual and regular course  of  business
 of the benefit corporation,] shall [not] be [effective unless the trans-
 action  is]  approved by at least the minimum status vote in addition to
 any other vote required by this chapter,  the  certificate  of  incorpo
 ration or the bylaws.
 

S  6.  This  act  shall  take  effect on the same date and in the same
 manner as section 5 of chapter 599 of the laws of 2011, takes effect.

S6088-2011: Relates to the incorporation of benefit corporations and standards of conduct of directors and officers of benefit corporations