SENATE BUDGET AND APPROPRIATIONS COMMITTEE
SENATE, No. 2170
STATE OF NEW JERSEY
DATED: DECEMBER 15, 2010
The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 2170.
The bill provides for the creation of a benefit corporation. The purpose of a benefit corporation is to create a general public benefit, defined as a material positive impact on society and the environment, through activities that promote some combination of specific public benefits. This allows a benefit corporation, at the direction of its shareholders, to pursue a mission that goes beyond making a profit for owners and investors, while providing legal justification and protection for the actions of its officers and board members that consider social and environmental issues when making decisions on behalf of the corporation.
The bill allows a benefit corporation to identify one or more specific public benefits in addition to its stated purpose of creating a general public benefit. A specific public benefit 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.
The bill provides for a benefit corporation to be
formed in accordance with all corporations subject to Title 14A of the New
Jersey Statutes, the "New Jersey Business Corporation Act." An
existing corporation may become a benefit corporation by amending its
certificate of incorporation to state that the corporation is a benefit
corporation. The bill also provides for a benefit corporation to terminate its
status as a benefit corporation by amending its certificate
of incorporation to delete the statement that the corporation is a benefit corporation.
At least the minimum status vote is needed in order for a corporation to amend its certificate of incorporation to either become a benefit corporation or terminate its status as a benefit corporation. Minimum status vote means that, in addition to any other approval or vote required by the “New Jersey Business Corporation Act,” N.J.S.14A:1-1 et seq., or the certificate of incorporation:
(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 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 two-thirds of the votes that all shareholders of the class or series are entitled to cast thereon.
The bill provides for a standard of conduct for a benefit corporation’s board of directors and officers. The bill also provides for a benefit corporation to designate a “benefit director” and a “benefit officer.” It is the duty of the benefit director to determine whether or not the benefit corporation has acted in accordance with its general, and any specific, public benefit purpose. The benefit officer will perform any duties in the management of the benefit corporation relating to the purpose of the corporation to create a general or specific public benefit.
The bill requires that a benefit corporation deliver an annual benefit report including the following information:
(1) The ways in which the corporation pursued any general and specific public benefit during the year, the extent to which the public benefit was created, and any circumstances that hindered the creation of a public benefit;
(2) An assessment of the social and environmental performance of the corporation;
(3) The name of the benefit director and the benefit officer;
(4) The compensation paid by the corporation during the year to the benefit director;
(5) The name of each person that owns 5% or more of the outstanding shares of the benefit corporation; and
(6) A statement detailing whether, in the opinion of the benefit director, the benefit corporation acted in accordance with its general, and any specific, public benefit purpose.
The bill requires that the annual benefit report be sent to each shareholder within 120 days following the end of the fiscal year of the benefit corporation. The benefit corporation must also post its most recent benefit report on the public portion of its website, except that any proprietary information and the compensation paid to directors may be omitted from the report. The bill requires a benefit corporation to deliver a copy of its benefit report to the Department of the Treasury, for which the State Treasurer will charge a fee of $70 for filing the benefit report.
This bill was not certified as requiring a fiscal note.