Bill Summary for H 534 (2015-2016)

Summary date: 

Apr 6 2015

Bill Information:

View NCGA Bill Details2015-2016 Session
House Bill 534 (Public) Filed Wednesday, April 1, 2015
Intro. by McGrady, Daughtry, Harrison, Reives.

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Bill summary

Adds new Article 18, The North Carolina Benefit Corporation Act (Benefit Corporation Act), to GS Chapter 55. Provides that new Article 18 applies to all benefit corporations and defines benefit corporations to mean a domestic corporation that elects to become subject to the Benefit Corporation Act and that has not terminated its status as a benefit corporation under proposed GS 55-18-22 (termination of benefit corporation status). Provides additional details regarding the application and effect of the Benefit Corporation Act.

Provides definitions for the terms used in the Benefit Corporation Act. Defines general public benefit to mean the material positive impact on society and environment, as measured from a third-party standard, arising from the business and operations of a benefit corporation. Defines specific public benefit purpose to mean a corporate purpose conferring any particular benefit on society or the environment. Requires that the formation of a benefit corporation adhere to the provisions of the other Articles in GS Chapter 55 but that the articles of incorporation for the benefit corporation must state that it is a benefit corporation. Provides that a benefit corporation is not entitled to claim an exemption from any property tax imposed under Subchapter II of GS Chapter 105.

Requires heightened voting requirements for some actions and changes within a benefit corporation that are in addition to provisions of other Articles in GS Chapter 55. Provides process for a domestic corporation to elect to become a benefit corporation under proposed Article 18. Includes process for termination of benefit corporation status. Directs that the purpose of a benefit corporation must be to create general public benefit and that this purpose is in addition to any lawful business purpose.

Includes accountability provisions setting standards of conduct for directors of a benefit corporation. Requires that the board of directors of a benefit corporation designate by resolution one director who is an independent person to be the benefit director. Delineates the powers, duties, rights, and immunities specific to the Benefit Director. Allows for the designation of a benefit officer and provides for the officer's duties. Provides that the benefit director may serve as the benefits officer at the same time as serving as the benefit director.

Limits enforcement of the duties of directors under the Benefit Corporation Act to only in a benefit enforcement proceeding. Provides guidelines for commencing or maintaining a benefit enforcement proceeding.

Requires that a benefit corporation prepare an annual benefit report to be sent to each shareholder. Additionally requires the benefit corporation to post its annual benefit report on the public portion of its website for a period of five years; however, permits redaction of information regarding compensation paid to directors and any financial or proprietary information included in the benefit report.

Makes a conforming change to GS 55-13-02(a), which concerns shareholders' dissenting rights.

Effective October 1, 2015.

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