This bill has been amended

Bill S79-2011

Authorizes the incorporation of benefit corporations

Authorizes the incorporation of benefit corporations and provides for the public benefit to be created by benefit corporations, for the election and termination of the status of a benefit corporation, for the standards of conduct for directors and officers of a benefit corporation, and for the preparation and distribution of an annual benefit report by a benefit corporation.

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  • Apr 5, 2011: NOTICE OF COMMITTEE CONSIDERATION - REQUESTED
  • Jan 5, 2011: REFERRED TO JUDICIARY

Memo

BILL NUMBER:S79

TITLE OF BILL: An act to amend the general construction law and the business corporation law, in relation to authorizing the incorporation of benefit corporations, providing for the public benefit to be created by benefit corporations, for the election and termination of the status of a benefit corporation, for the standards of conduct for directors of a benefit corporation, and for the preparation and distribution of an annual benefit report by a benefit corporation

PURPOSE: This bill authorizes a New York corporation to elect to be a benefit corporation and thus to have as one of its purposes the creation of general public benefit.

SUMMARY OF PROVISIONS: Section 1 of the bill makes conforming changes to the general construction law.

Section 2 of the bill amends the New York Corporation Law by adding a new Article 17 entitled "Benefit Corporations."

Within Article 17, section 1701 establishes the application of the article only to benefit corporations and makes clear that Article 17 does not change the law applicable to corporations that do not elect to be benefit corporations.

The bill permits the incorporation in New York of "benefit corporations," which must have a "general public benefit" purpose, defined in the bill as a material, positive impact on society and the environment, as measured by a third-party standard, through activities that promote a combination of specific public benefits. Likewise, the bill defines a "specific public benefit" to mean providing individuals or communities with beneficial products or services; promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business; preserving the environment; improving human health; promoting the arts, sciences, or advancement of knowledge; increasing the flow of capital to entities with a public benefit purpose; or the accomplishment of any other particular benefit for society or the environment.

The bill allows a corporation to elect to be a benefit corporation by amending its charter to include a statement that the corporation is a benefit Corporation. An amendment electing benefit corporation status, and the subsequent termination of benefit corporation status, must be approved by the stockholders. The bill further allows a benefit corporation to identify and include one or more specific public benefits in its charter with the approval of the stockholders.

In determining what the director reasonably believes are in the best interests of the benefit corporation, a director must consider the effects of any action or decision not to act on: the benefit corporation's stockholders; the benefit corporation's employees and workforce, including the employees and workforce of subsidiaries and suppliers; the interests of customers as beneficiaries of the general or specific public benefit purposes of the benefit corporation; community and societal considerations, including those of any community in which offices or facilities of the benefit corporation or the benefit corporation's subsidiaries or suppliers are located; and the local and global environment.

The director may consider any other pertinent factors or the interests of any other group, as appropriate. In the reasonable performance of duties in accordance with the standard provided in the bill, a benefit corporation director retains standard personal immunity for his or her actions as a benefit corporation director.

The bill requires a benefit corporation to deliver an annual benefit report to all stockholders that includes (1) the ways in which the benefit corporation pursued general public benefit during the preceding year and the extent to which the general public benefit was created; and (2) the ways in which the benefit corporation pursued any specific public benefit included in its charter and the extent to which that specific public benefit was created. The annual report must also discuss circumstances hindering the benefit corporation's ability to create the public benefit and an assessment of the societal and environmental performance of the benefit corporation. The report must be delivered to stockholders within 120 days of the end of the benefit corporation's fiscal year, and posted on the benefit corporation's public web site, if any exists.

Section 4 of the bill provides that it shall take effect on the 60th day after it becomes law.

FISCAL IMPACT ON THE STATE: Potential minimal increase in revenues from filings by existing corporations that elect to change their status.

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. Benefit Corporations have the potential to be the corporate entity that can offer entrepreneurs and investors the option to build and invest in businesses that meet higher standards of corporate purpose, accountability and transparency.

As a leading center of business, New York is well-positioned to become one of the first states to allow the incorporation of these cutting-edge benefit corporations. Currently, socially-minded companies are often left with the catch-22 of either not being able

to earn a profit or opening their directors up to possible personal liability for decisions that do not maximize shareholder value or increasingly going to states other than New York that are pursuing this corporate form. This bill solves that dilemma.

Without increasing regulation or impacting the state budget, the bill:

* Removes legal impediments preventing businesses and investors from making their own decisions to use sustainability and social innovation as a competitive advantage;

* Gives New York a competitive advantage as a leading state by accelerating development of a new sector of the economy in New York by providing legal recognition for businesses that adopt higher standards of corporate purpose, accountability and transparency;

* Provides clarity to business leaders, general counsels and investors that the fiduciary duty of benefit corporations affirmatively includes creating public benefit;

* Expands shareholder rights to enforce this expanded definition of fiduciary duty, as well as a higher standard of conduct for directors to consider the impact of their decisions on both financial and non-financial interests;

* Includes higher standards of transparency, requiring annual reporting to shareholders and the public about the corporation's social and environmental performance;

* Helps ensure that these corporations and the positive social and environmental impact they create are built to last beyond marketing trends, strong business cycles or existing corporate leadership by requiring a 3/4 majority vote of shareholders to remove these higher standards.

LEGISLATIVE HISTORY: 2010: S.7855B (Passed Senate)/A.11498B

EFFECTIVE DATE: Sixtieth day after becoming law.


Text

STATE OF NEW YORK ________________________________________________________________________ 79 2011-2012 Regular Sessions IN SENATE (PREFILED) January 5, 2011 ___________
Introduced by Sens. SQUADRON, BRESLIN, PARKER, SERRANO -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary AN ACT to amend the general construction law and the business corpo- ration law, in relation to authorizing the incorporation of benefit corporations, providing for the public benefit to be created by bene- fit corporations, for the election and termination of the status of a benefit corporation, for the standards of conduct for directors of a benefit corporation, and for the preparation and distribution of an annual benefit report by a benefit corporation THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraphs 3 and 4 of subdivision d of section 65 of the general construction law, as added by chapter 451 of the laws of 1973 are amended and a new paragraph 5 is added to read as follows: 3. A railroad corporation, [or] 4. A transportation corporation[.], OR 5. A BENEFIT CORPORATION. S 2. Section 66 of the general construction law is amended by adding a new subdivision 4-a to read as follows: 4-A. A "BENEFIT CORPORATION" MEANS A BUSINESS CORPORATION THAT HAS ELECTED TO BECOME SUBJECT TO ARTICLE SEVENTEEN OF THE BUSINESS CORPO- RATION LAW AND WHOSE STATUS AS A BENEFIT CORPORATION HAS NOT BEEN TERMI- NATED AS PROVIDED IN ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION LAW. S 3. The business corporation law is amended by adding a new article 17 to read as follows: ARTICLE 17 BENEFIT CORPORATIONS SECTION 1701. APPLICATION AND EFFECT OF ARTICLE. 1702. DEFINITIONS.
1703. FORMATION OF BENEFIT CORPORATIONS. 1704. ELECTION OF AN EXISTING BUSINESS CORPORATION TO BECOME A BENEFIT CORPORATION. 1705. TERMINATION OF BENEFIT CORPORATION STATUS. 1706. CORPORATE PURPOSES. 1707. STANDARD OF CONDUCT FOR DIRECTORS. 1708. ANNUAL BENEFIT REPORT. S 1701. APPLICATION AND EFFECT OF ARTICLE. (A) THIS ARTICLE SHALL BE APPLICABLE TO ALL BENEFIT CORPORATIONS. (B) THE EXISTENCE OF A PROVISION OF THIS ARTICLE SHALL NOT OF ITSELF CREATE ANY IMPLICATION THAT A CONTRARY OR DIFFERENT RULE OF LAW IS OR WOULD BE APPLICABLE TO A BUSINESS CORPORATION THAT IS NOT A BENEFIT CORPORATION. THIS ARTICLE SHALL NOT AFFECT ANY STATUTE OR RULE OF LAW THAT IS OR WOULD BE APPLICABLE TO A BUSINESS CORPORATION THAT IS NOT A BENEFIT CORPORATION. (C) EXCEPT AS OTHERWISE PROVIDED IN THIS ARTICLE, THIS CHAPTER SHALL BE GENERALLY APPLICABLE TO ALL BENEFIT CORPORATIONS. (D) A PROVISION OF THE CERTIFICATE OF INCORPORATION OR BYLAWS OF A BENEFIT CORPORATION MAY NOT RELAX, BE INCONSISTENT WITH OR SUPERSEDE ANY PROVISION OF THIS ARTICLE. S 1702. DEFINITIONS. AS USED IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM: (A) "BENEFIT CORPORATION" MEANS A BUSINESS CORPORATION THAT HAS ELECTED TO BECOME SUBJECT TO THIS ARTICLE AND WHOSE STATUS AS A BENEFIT CORPORATION HAS NOT BEEN TERMINATED AS PROVIDED IN THIS ARTICLE. (B) "GENERAL PUBLIC BENEFIT" MEANS A MATERIAL POSITIVE IMPACT ON SOCI- ETY AND THE ENVIRONMENT, AS MEASURED BY A THIRD-PARTY STANDARD. (C) "INDEPENDENT" MEANS THAT A PERSON HAS NO MATERIAL RELATIONSHIP WITH A BENEFIT CORPORATION OR ANY OF ITS SUBSIDIARIES (OTHER THAN THE RELATIONSHIP OF SERVING AS THE BENEFIT DIRECTOR OR BENEFIT OFFICER), EITHER DIRECTLY OR AS A SHAREHOLDER, PARTNER, MEMBER OR OTHER OWNER OR A DIRECTOR, OFFICER OR OTHER MANAGER OF AN ENTITY THAT HAS A MATERIAL RELATIONSHIP WITH THE BENEFIT CORPORATION OR ANY OF ITS SUBSIDIARIES. A MATERIAL RELATIONSHIP BETWEEN AN INDIVIDUAL AND A BENEFIT CORPORATION OR ANY OF ITS SUBSIDIARIES WILL BE CONCLUSIVELY PRESUMED TO EXIST IF: (1) THE PERSON IS, OR HAS BEEN WITHIN THE LAST THREE YEARS, AN EMPLOY- EE OF THE BENEFIT CORPORATION OR ANY OF ITS SUBSIDIARIES; (2) AN IMMEDIATE FAMILY MEMBER OF THE PERSON IS, OR HAS BEEN WITHIN THE LAST THREE YEARS, AN EXECUTIVE OFFICER OF THE BENEFIT CORPORATION OR ANY OF ITS SUBSIDIARIES; OR (3) THE PERSON, OR AN ENTITY OF WHICH THE PERSON IS A DIRECTOR, OFFI- CER OR OTHER MANAGER OR IN WHICH THE PERSON OWNS BENEFICIALLY OR OF RECORD FIVE PERCENT OR MORE OF THE EQUITY INTERESTS, OWNS BENEFICIALLY OR OF RECORD FIVE PERCENT OR MORE OF THE SHARES OF THE BENEFIT CORPO- RATION. (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: (1) THE HOLDERS OF SHARES OF EVERY CLASS OR SERIES SHALL BE ENTITLED TO VOTE ON THE CORPORATE ACTION REGARDLESS OF ANY LIMITATION STATED IN THE CERTIFICATE OF INCORPORATION OR BYLAWS ON THE VOTING RIGHTS OF ANY CLASS OR SERIES. (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. (E) "SPECIFIC PUBLIC BENEFIT," AS MEASURED BY A THIRD-PARTY STANDARD, INCLUDES: (1) PROVIDING LOW-INCOME OR UNDERSERVED INDIVIDUALS OR COMMUNITIES WITH BENEFICIAL PRODUCTS OR SERVICES; (2) PROMOTING ECONOMIC OPPORTUNITY FOR INDIVIDUALS OR COMMUNITIES BEYOND THE CREATION OF JOBS IN THE NORMAL COURSE OF BUSINESS; (3) PRESERVING THE ENVIRONMENT; (4) IMPROVING HUMAN HEALTH; (5) PROMOTING THE ARTS, SCIENCES OR ADVANCEMENT OF KNOWLEDGE; (6) INCREASING THE FLOW OF CAPITAL TO ENTITIES WITH A PUBLIC BENEFIT PURPOSE; AND (7) THE ACCOMPLISHMENT OF ANY OTHER PARTICULAR BENEFIT FOR SOCIETY OR THE ENVIRONMENT. (F) "SUBSIDIARY" MEANS AN ENTITY IN WHICH A PERSON OWNS BENEFICIALLY OR OF RECORD FIFTY PERCENT OR MORE OF THE EQUITY INTERESTS. (G) "THIRD-PARTY STANDARD" MEANS A STANDARD RECOGNIZED BY THE SECRE- TARY OF STATE OR ITS DESIGNEE OR DESIGNEES FOR DEFINING, REPORTING AND ASSESSING CORPORATE SOCIAL AND ENVIRONMENTAL PERFORMANCE THAT IS: (1) DEVELOPED BY A PERSON THAT IS INDEPENDENT OF THE BENEFIT CORPO- RATION; AND (2) TRANSPARENT BECAUSE THE FOLLOWING INFORMATION ABOUT THE STANDARD IS PUBLICLY AVAILABLE: (A) THE FACTORS CONSIDERED WHEN MEASURING THE PERFORMANCE OF A BUSI- NESS; (B) THE RELATIVE WEIGHTINGS OF THOSE FACTORS; AND (C) THE IDENTITY OF THE PERSONS WHO DEVELOPED AND CONTROL CHANGES TO THE STANDARD AND THE PROCESS BY WHICH THOSE CHANGES ARE MADE. S 1703. FORMATION OF BENEFIT CORPORATIONS. A BENEFIT CORPORATION SHALL BE FORMED IN ACCORDANCE WITH THIS CHAPTER EXCEPT THAT ITS CERTIFICATE OF INCORPORATION SHALL ALSO STATE THAT IT IS A BENEFIT CORPORATION. S 1704. ELECTION OF AN EXISTING BUSINESS CORPORATION TO BECOME A BENEFIT CORPORATION. (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 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 MUST APPROVE THE PLAN OF MERG- ER OR CONSOLIDATION 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 1705. TERMINATION OF BENEFIT CORPORATION STATUS. (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 AMENDMENT SHALL NOT BE EFFECTIVE UNLESS IT IS ADOPTED BY AT LEAST THE MINIMUM STATUS VOTE. (B) IF A PLAN OR MERGER OR CONSOLIDATION WOULD HAVE THE EFFECT OF TERMINATING THE STATUS OF A BUSINESS CORPORATION AS A BENEFIT CORPO- RATION, THE PLAN SHALL NOT BE EFFECTIVE UNLESS IT IS ADOPTED BY AT LEAST THE MINIMUM STATUS VOTE.
S 1706. CORPORATE PURPOSES. (A) EVERY BENEFIT CORPORATION SHALL HAVE A PURPOSE OF CREATING GENERAL PUBLIC BENEFIT. THIS PURPOSE IS IN ADDITION TO ITS PURPOSES UNDER SECTION TWO HUNDRED ONE OF THIS CHAPTER AND ANY SPECIFIC PURPOSE SET FORTH IN ITS ARTICLES UNDER PARAGRAPH (B) OF THIS SECTION. THE PURPOSE TO CREATE GENERAL PUBLIC BENEFIT MAY BE A LIMITATION ON THE OTHER PURPOSES OF THE BENEFIT CORPORATION, AND SHALL CONTROL OVER ANY INCON- SISTENT PURPOSE OF THE BENEFIT CORPORATION. (B) THE ARTICLES OF A BENEFIT CORPORATION MAY IDENTIFY ONE OR MORE SPECIFIC PUBLIC BENEFITS THAT IT IS THE PURPOSE OF THE BENEFIT CORPO- RATION TO CREATE IN ADDITION TO ITS PURPOSES UNDER SECTION TWO HUNDRED ONE OF THIS CHAPTER AND PARAGRAPH (A) OF THIS SECTION. (C) THE CREATION OF GENERAL AND SPECIFIC PUBLIC BENEFITS AS PROVIDED IN PARAGRAPHS (A) AND (B) OF THIS SECTION IS IN THE BEST INTERESTS OF THE BENEFIT CORPORATION. (D) A BENEFIT CORPORATION MAY AMEND ITS CERTIFICATE OF INCORPORATION TO ADD, AMEND OR DELETE THE IDENTIFICATION OF A SPECIFIC PUBLIC BENEFIT THAT IT IS THE PURPOSE OF THE BENEFIT CORPORATION TO CREATE. THE AMEND- MENT SHALL NOT BE EFFECTIVE UNLESS IT IS ADOPTED BY AT LEAST THE MINIMUM STATUS VOTE. S 1707. STANDARD OF CONDUCT FOR DIRECTORS. (A) IN DISCHARGING THE DUTIES OF THEIR RESPECTIVE POSITIONS, THE BOARD OF DIRECTORS, COMMITTEES OF THE BOARD AND INDIVIDUAL DIRECTORS OF A BENEFIT CORPORATION: (1) SHALL CONSIDER THE EFFECTS OF ANY ACTION UPON: (A) THE ABILITY FOR THE BENEFIT CORPORATION TO ACCOMPLISH ITS PUBLIC BENEFIT PURPOSE; (B) THE SHAREHOLDERS OF THE BENEFIT CORPORATION; (C) THE EMPLOYEES AND WORKFORCE OF THE BENEFIT CORPORATION AND ITS SUBSIDIARIES AND SUPPLIERS; (D) THE INTERESTS OF CUSTOMERS AS BENEFICIARIES OF THE GENERAL OR SPECIFIC PUBLIC BENEFIT PURPOSES OF THE BENEFIT CORPORATION; (E) COMMUNITY AND SOCIETAL CONSIDERATIONS, INCLUDING THOSE OF ANY COMMUNITY IN WHICH OFFICES OR FACILITIES OF THE BENEFIT CORPORATION OR ITS SUBSIDIARIES OR SUPPLIERS ARE LOCATED; (F) THE LOCAL AND GLOBAL ENVIRONMENT; AND (G) 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 MAY BE BEST SERVED BY THE CONTINUED INDEPENDENCE OF THE BENEFIT CORPORATION; (2) MAY CONSIDER: (A) THE RESOURCES, INTENT AND CONDUCT (PAST, STATED AND POTENTIAL) OF ANY PERSON SEEKING TO ACQUIRE CONTROL OF THE CORPORATION; AND (B) ANY OTHER PERTINENT FACTORS OR THE INTERESTS OF ANY OTHER GROUP THAT THEY DEEM APPROPRIATE; AND (3) SHALL NOT BE REQUIRED TO GIVE PRIORITY TO THE INTERESTS OF ANY PARTICULAR PERSON OR GROUP REFERRED TO IN SUBPARAGRAPHS ONE AND TWO OF THIS PARAGRAPH 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 CERTIFICATE OF INCORPORATION. (B) THE CONSIDERATION OF INTERESTS AND FACTORS IN THE MANNER REQUIRED BY PARAGRAPH (A) OF THIS SECTION: (1) SHALL NOT CONSTITUTE A VIOLATION OF THE PROVISIONS OF SECTION SEVEN HUNDRED SEVENTEEN OF THIS CHAPTER; AND
(2) IS IN ADDITION TO THE ABILITY OF DIRECTORS TO CONSIDER INTERESTS AND FACTORS AS PROVIDED IN SECTION SEVEN HUNDRED SEVENTEEN OF THIS CHAP- TER. (C) NOTWITHSTANDING THE PROVISIONS OF PARAGRAPH (B) OF THIS SECTION, A DIRECTOR OF A BENEFIT CORPORATION HAS THE FIDUCIARY DUTIES OF A DIRECTOR OF A BUSINESS CORPORATION THAT IS NOT A BENEFIT CORPORATION EXCEPT TO THE EXTENT THOSE DUTIES ARE INCONSISTENT WITH THE PROVISIONS OF THIS ARTICLE. S 1708. ANNUAL BENEFIT REPORT. (A) A BENEFIT CORPORATION MUST DELIVER TO EACH SHAREHOLDER AN ANNUAL BENEFIT REPORT INCLUDING: (1) A NARRATIVE DESCRIPTION OF: (A) THE WAYS IN WHICH THE BENEFIT CORPORATION PURSUED GENERAL PUBLIC BENEFIT DURING THE YEAR AND THE EXTENT TO WHICH GENERAL PUBLIC BENEFIT WAS CREATED; (B) THE WAYS IN WHICH THE BENEFIT CORPORATION PURSUED ANY SPECIFIC PUBLIC BENEFIT THAT THE CERTIFICATE OF INCORPORATION STATES IT IS THE PURPOSE OF THE BENEFIT CORPORATION TO CREATE AND THE EXTENT TO WHICH THAT SPECIFIC PUBLIC BENEFIT WAS CREATED; AND (C) ANY CIRCUMSTANCES THAT HAVE HINDERED THE CREATION BY THE BENEFIT CORPORATION OF GENERAL OR SPECIFIC PUBLIC BENEFIT; (2) AN ASSESSMENT OF THE PERFORMANCE OF THE BENEFIT CORPORATION, RELA- TIVE TO ITS GENERAL PUBLIC BENEFIT PURPOSE AND, IF APPLICABLE, ITS SPECIFIC PUBLIC BENEFIT PURPOSE OR PURPOSES, PREPARED IN ACCORDANCE WITH A THIRD-PARTY STANDARD APPLIED CONSISTENTLY WITH ANY APPLICATION OF THAT STANDARD IN PRIOR BENEFIT REPORTS OR ACCOMPANIED BY AN EXPLANATION OF THE REASONS FOR ANY INCONSISTENT APPLICATION; (3) THE COMPENSATION PAID BY THE BENEFIT CORPORATION DURING THE YEAR TO EACH DIRECTOR IN THAT CAPACITY; AND (4) THE NAME OF EACH PERSON THAT OWNS BENEFICIALLY OR OF RECORD FIVE PERCENT OR MORE OF THE OUTSTANDING SHARES OF THE BENEFIT CORPORATION. (B) THE BENEFIT REPORT MUST BE SENT ANNUALLY TO EACH SHAREHOLDER WITH- IN ONE HUNDRED TWENTY 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. DELIVERY OF A BENEFIT REPORT TO SHAREHOLDERS IS IN ADDITION TO ANY OTHER REQUIREMENT TO DELIVER AN ANNUAL REPORT TO SHAREHOLDERS. (C) A BENEFIT CORPORATION MUST POST ITS MOST RECENT BENEFIT REPORT ON THE PUBLIC PORTION OF ITS WEBSITE, IF ANY, EXCEPT THAT THE COMPENSATION PAID TO DIRECTORS AND ANY FINANCIAL OR PROPRIETARY INFORMATION INCLUDED IN THE BENEFIT REPORT MAY BE OMITTED FROM THE BENEFIT REPORT AS POSTED. (D) CONCURRENTLY WITH THE DELIVERY OF THE BENEFIT REPORT TO SHAREHOLD- ERS PURSUANT TO PARAGRAPH (B) OF THIS SECTION, THE BENEFIT CORPORATION MUST DELIVER A COPY OF THE BENEFIT REPORT TO THE DEPARTMENT FOR FILING, EXCEPT THAT THE COMPENSATION PAID TO DIRECTORS AND ANY FINANCIAL OR PROPRIETARY INFORMATION INCLUDED IN THE BENEFIT REPORT MAY BE OMITTED FROM THE BENEFIT REPORT AS FILED UNDER THIS SECTION. (E) IF A BENEFIT CORPORATION HAS NOT DELIVERED A BENEFIT REPORT TO THE SECRETARY OF STATE FOR A PERIOD OF TWO YEARS, THE SECRETARY OF STATE MAY PREPARE AND FILE A STATEMENT THAT THE CORPORATION HAS FORFEITED ITS STATUS AS A BENEFIT CORPORATION AND IS NO LONGER SUBJECT TO THIS ARTI- CLE. IF THE CORPORATION SUBSEQUENTLY DELIVERS A BENEFIT REPORT TO THE SECRETARY OF STATE FOR FILING, THE STATUS OF THE CORPORATION AS A BENE- FIT CORPORATION SHALL BE AUTOMATICALLY REINSTATED UPON THE FILING OF THE BENEFIT REPORT BY THE SECRETARY OF STATE AND THE CORPORATION SHALL AGAIN BE SUBJECT TO THIS ARTICLE.
(F) THE ANNUAL BENEFIT REPORT SHALL BE IN ADDITION TO ALL OTHER REPORTING REQUIREMENTS UNDER THIS CHAPTER. S 4. This act shall take effect on the sixtieth day after it shall have become a law.

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