Bill Summary for S 26 (2011-2012)

Summary date: 

Mar 21 2011

Bill Information:

View NCGA Bill Details2011-2012 Session
Senate Bill 26 (Public) Filed Tuesday, February 1, 2011
TO ENACT THE NORTH CAROLINA BENEFIT CORPORATION ACT.
Intro. by Vaughan, Stevens, Kinnaird.

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Bill summary

Senate committee substitute makes the following changes to 1st edition.
Amends proposed Article 18, adding that a benefit corporation is not entitled to claim an exemption from any property tax imposed under Subchapter II of GS Chapter 105. Expands the definition for third-party standard, and makes other clarifying and organizational changes to definitions applicable to the proposed Article. Also modifies when a material relationship is presumed to exist, found within the definition of independent person. Clarifies that a domestic corporation, including a converted domestic corporation, may be incorporated as a benefit corporation by stating such in the initial articles of incorporation. Requires the articles of incorporation to also identify any specific public benefit purpose, as specified, and any provision required or permitted by law. Adds a requirement that shareholder meetings must provide notice and discussion of the transition to or resulting existence of a benefit corporation. Includes a requirement that shareholder meetings provide notice and discussion of the anticipated effect on the shareholders of terminating the benefit corporation status. Clarifies the heightened voting requirements applicable to certain actions in proposed Article 18 setting the voting percentages to be net according to the type of entity.
Clarifies that the standard of conduct applies to the directors of a benefit corporation (was, applies to the board of directors, committees of the board, and individual directors). Specifies that a director is not liable for monetary damages arising out of an action for any act or omission to act, other than any act or omission that the director, at the time of such act or omission, knew or believed to be clearly in conflict with the benefit corporation’s general public benefit purpose or any stated specific public benefit purpose (expands previously proposed language). Indicates that the board of directors of a benefit corporation must by resolution designate a benefit director. Clarifies the duties of the benefit director. Deletes provision specifying the standard of conduct for officers. Clarifies the duties of the benefit officer, and adds that the officer must monitor the benefit corporation’s pursuit of general and any specific public benefit purposes.
Clarifies that a benefit enforcement proceeding may be commenced or maintained by a shareholder that owns 5% or more of the benefit corporation’s shares, a person or group of persons owning 5% or more (was, 10% or more) of the outstanding equity voting interests in an entity in which the benefit corporation is a subsidiary, or by one of the other preexisting entities. Adds that a benefit enforcement proceeding commenced or maintained derivatively is subject to the requirements applicable to derivative proceedings under Part 4 of Article 7 of GS Chapter 55, except that such requirements must be interpreted as specified. Adds that a benefit corporation’s annual benefit report must also include a statement of any relationship between the benefit corporation and the entity that developed the third-party standard that might affect the credibility of the objective assessment of the third-party standard. Clarifies that the benefit corporation must post each annual benefit report on the public portion of the corporation’s website for a period of five years. Adds a section, making a conforming change to GS 55-13-02(a), which concerns shareholders’ dissenting rights. Makes additional clarifying and technical changes.

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