NORTH CAROLINA PUBLIC BENEFIT CORPORATION ACT.

View NCGA Bill Details2017-2018 Session
House Bill 616 (Public) Filed Wednesday, April 5, 2017
AN ACT TO ENACT THE NORTH CAROLINA PUBLIC BENEFIT CORPORATION ACT.
Intro. by McGrady, Dobson, Ross, Zachary.

Status: Failed 2nd Reading (House Action) (Jun 26 2017)
H 616

Bill Summaries:

  • Summary date: Jun 26 2017 - More information

    House amendments make the following changes to the 2nd edition.

    Amendment #1 deletes proposed changes to GS 55-13-02.

    Amendment #2 amends GS 55-18-02 by adding that no unit of local government or political subdivision of the State or local government may incorporate as or transition to a public benefit corporation.

    Amendment #3 further amends GS 55-18-02 by adding that State and local governments must not provide benefits or preferential treatment to public benefit corporations formed under the new Article that are not also available to corporations for profit that are not public benefit corporations. 


  • Summary date: Apr 19 2017 - More information

    House committee substitute makes the following change to the 1st edition.

    Amends proposed GS 55-18-05 (Transition to public benefit corporation status). Requires unanimous approval of the outstanding shares of a corporation entitled to vote for a corporation to transition to a public benefit corporation, either by amending its articles of incorporation, or through merger.


  • Summary date: Apr 6 2017 - More information

    Enacts new Article 18, The North Carolina Public Benefit Corporation Act, in GS Chapter 55. Specifies that the Article applies to all public benefit corporations, and that , except as provided in new GS 55-18-05, corporations that are not public benefit corporations are not subject to the Article and the Article does not otherwise affect any law applicable to a corporation that is not a public benefit corporation.

    Defines a public benefit corporation as a corporation for profit that is incorporated under and subject to the requirements GS Chapter 55 and is intended to produce one or more public benefits (a positive effect or reduction of a negative effect on one or more categories of persons, entities, communities, or interests) and to operate in a responsible manner by managing in a manner that balances the stockholders' pecuniary interests, the best interests of those materially affected by the corporation's conduct, and the one or more specific public benefits identified in its articles of incorporation.

    Requires that the articles of incorporation include: (1) a statement that the corporation is a public benefit corporation and (2) an identification of one or more specific public benefits to be promoted by the corporation. Sets out requirements for the corporation's name.

    Sets out the process under which an existing corporation may become a public benefit corporation, as well as the process for terminating public benefit corporation status.

    Requires that any stock certificates issued by a public benefit corporation, any notice, or any shareholder meeting notice state that the corporation is a public benefit corporation.

    Requires the board of directors to manage or direct the business and affairs of the public benefit corporation in a manner that balances the pecuniary interests of the shareholders, the best interests of those materially affected by the corporation's conduct, and the one or more specific public benefits identified in its articles of incorporation. Prohibits a director of a public benefit corporation from having any duty to any person on account of any interest of the person in the one or more specific public benefits identified in the articles of incorporation or on account of any interest materially affected by the corporation's conduct. 

    Requires a public benefit corporation, no less than biennially, give its shareholders a statement as to the corporation's promotion of the specific public benefits identified in its articles of incorporation and of the best interest of those persons materially affected by the corporation's conduct. Sets out what must be included in the statement. Allows the corporation's articles of incorporation or bylaws to require the corporation to provide the statement required more frequently than biennially, make the statement available to the public, and/or use either or both a third‑party standard or third‑party certification in making the required assessment of success in meeting objectives.

    Allows shareholders to bring a derivative proceeding if, at the time the proceeding is brought, either: (1) for a public benefit corporation with shares on a national securities exchange, the shareholders bringing the proceeding own, individually or collectively, the lesser of (i) at least 2% of the corporation's outstanding shares or (ii) shares with a market value of at least $2 million or (2) for all other public benefit corporations, the shareholders bringing the proceeding own, individually or collectively, at least 2% of the corporation's outstanding shares.

    Amends GS 55-13-02 to  entitle a shareholder to appraisal rights and to obtain payment of the fair value of that shareholder's shares, in the event of consummation of a transition to public benefit corporation status, unless: (1 ) the shareholder voted in favor of, or consented in writing to, the transition to public benefit corporation status or (2) any class or series of shares at the record date fixed to determine the shareholders entitled to receive notice of the meeting to act upon the transition to public benefit corporation status were either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 shareholders.

    Effective October 1, 2017. 


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