SB298: Bill Text

LRB-3657/1

ARG:kjf

2017 - 2018 LEGISLATURE

2017 Senate BILL 298

June 15, 2017 - Introduced by Senators Testin, Johnson, Darling, Ringhand, Wirch and Harsdorf, cosponsored by Representatives Skowronski, Hesselbein, Genrich, Horlacher, Ohnstad, Crowley, Subeck, C. Taylor, Kulp, Quinn, Sanfelippo, Spreitzer, Hintz and Kooyenga. Referred to Committee on Economic Development, Commerce and Local Government.

SB298,1,2 An Act to create chapter 204 of the statutes; relating to: creation of a category of business corporation identified as a benefit corporation.

Analysis by the Legislative Reference Bureau

This bill creates a category of business corporation identified as a benefit corporation. A benefit corporation may also fall within other categories of business corporations, such as service corporations or statutory close corporations.

Under the bill, a benefit corporation may be created by including in the articles of incorporation at the time of formation, or by later amending the articles of incorporation to include, a statement that the corporation is a benefit corporation. A business corporation's status as a benefit corporation may be terminated by amending the articles of incorporation to delete this statement.

A benefit corporation must have a purpose of creating general public benefit and the benefit corporation may also specify in its articles of incorporation additional specific public benefit purposes. A “general public benefit" is defined as a material positive impact on society and the environment by the operations of a benefit corporation taken as a whole, through activities that promote some combination of specific public benefits. Examples of “specific public benefit" include all of the following: 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 board of directors of a benefit corporation must include one director designated as the “benefit director." Notwithstanding provisions of the business corporation law, the board of directors, committees of the board, and individual directors of a benefit corporation, in considering the best interests of the benefit corporation, must consider the effects of any action or inaction on all of the following: 1) the shareholders of the benefit corporation; 2) the employees and workforce of the benefit corporation and its subsidiaries and suppliers; 3) the interests of customers as beneficiaries of the general public benefit or specific public benefit purposes of the benefit corporation; 4) community and societal factors, including those of any community in which offices or facilities of the benefit corporation or its subsidiaries or suppliers are located; 5) the local and global environment; 6) 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; and 7) the ability of the benefit corporation to accomplish its general public benefit purpose and any specific public benefit purpose. In addition, the board, committees, and individual directors may consider the resources, intent, and conduct of any person seeking to acquire control of the benefit corporation and any other pertinent factors or the interests of any other group.

A benefit corporation may also designate a “benefit officer," who has the powers and duties relating to the benefit corporation's purpose of creating general public benefit or specific public benefit. Each officer of a benefit corporation must consider the same interests and factors applicable for directors, identified as items 1 to 7 immediately above, when the officer has discretion to act with respect to a matter that may have a material effect on the creation of general or specific public benefit by the benefit corporation.

A benefit corporation must annually provide its shareholders with a statement as to the benefit corporation's promotion of general public benefit or any specific public benefit identified in its articles of incorporation, which statement includes specified information.

The bill also includes certain limitations on imposing personal liability on directors and officers of benefit corporations.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB298,1 Section 1 . Chapter 204 of the statutes is created to read:

SB298,2,2 CHAPTER 204

SB298,2,3 BENEFIT Corporations

SB298,2,4 SUBCHAPTER I

SB298,2,5 GENERAL PROVISIONS

SB298,3,2 204.101 Application and effect of chapter. (1) General rule. This chapter shall be applicable to all benefit corporations.

SB298,3,7 (2) Application of business corporation law generally. The existence of a provision of this chapter shall not of itself create an implication that a contrary or different rule of law is applicable to a business corporation that is not a benefit corporation. This chapter shall not affect any statute or rule that is applicable to a business corporation that is not a benefit corporation.

SB298,3,12 (3) Laws applicable to benefit corporations. Except as otherwise provided in this chapter, ch. 180 shall be generally applicable to all benefit corporations. The specific provisions of this chapter shall control over the general provisions of ch. 180. A benefit corporation may be simultaneously subject to this chapter and provisions of other chapters.

SB298,3,15 (4) Organic records. A provision of the articles or bylaws of a benefit corporation may not relax, be inconsistent with, or supersede a provision of this chapter.

SB298,3,17 204.102 Definitions. Unless the context clearly indicates otherwise, in this chapter:

SB298,3,20 (1) “Benefit corporation" means a business corporation that has elected to become subject to this chapter and whose status as a benefit corporation has not been terminated under s. 204.105.

SB298,3,22 (2) “Benefit director" means the person designated as the benefit director of a benefit corporation as provided in s. 204.302.

SB298,3,24 (3) “Benefit officer" means the officer of a benefit corporation, if any, designated as the benefit officer as provided in s. 204.304.

SB298,3,25 (4) “Entity" has the meaning given in s. 180.0103 (8).

SB298,4,3 (5) “General public benefit" means a material positive impact on society and the environment by the operations of a benefit corporation taken as a whole, through activities that promote some combination of specific public benefits.

SB298,4,4 (6) “Service corporation" has the meaning given in s. 180.1901 (2).

SB298,4,5 (7) “Specific public benefit" includes all of the following:

SB298,4,7 (a) Providing low-income or underserved individuals or communities with beneficial products or services.

SB298,4,9 (b) Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business.

SB298,4,10 (c) Preserving the environment.

SB298,4,11 (d) Improving human health.

SB298,4,12 (e) Promoting the arts, sciences, or advancement of knowledge.

SB298,4,13 (f) Increasing the flow of capital to entities with a public benefit purpose.

SB298,4,15 (g) The accomplishment of any other particular benefit for society or the environment.

SB298,4,18 204.103 Formation of benefit corporations. A benefit corporation shall be formed in accordance with ch. 180, except that its articles shall also state that it is a benefit corporation.

SB298,4,23 204.104 Election of an existing business corporation to become a benefit corporation. (1) Amendment. An existing business corporation may become a benefit corporation under this chapter by amending its articles so that they contain, in addition to the requirements of s. 180.0202, a statement that the corporation is a benefit corporation.

SB298,5,5 (2) Fundamental transactions. If a corporation that is not a benefit corporation is a party to a merger, consolidation, or division or is the exchanging corporation in a share exchange, and the surviving, new, or any resulting corporation in the merger, consolidation, division, or share exchange is to be a benefit corporation, then the plan of merger, consolidation, division, or share exchange shall not be effective unless the articles of the surviving, new, or resulting corporation contain a statement that the corporation is a benefit corporation.

SB298,5,9 204.105 Termination of benefit corporation status. A benefit corporation may terminate its status as such and cease to be subject to this chapter by amending its articles to delete the provision required by ss. 204.103 and 204.104 to be stated in the articles of a benefit corporation.

SB298,5,10 SUBCHAPTER II

SB298,5,11 corporate Purposes

SB298,5,15 204.201 Corporate purposes. (1) General public benefit purpose. A benefit corporation shall have a purpose of creating general public benefit. This purpose is in addition to its purpose under s. 180.0301 and any specific purpose set forth in its articles under sub. (2).

SB298,5,20 (2) Optional specific public benefit purpose. The articles of a benefit corporation may identify one or more specific public benefits that it is the purpose of the benefit corporation to create in addition to its purposes under s. 180.0301 and sub. (1). The identification of a specific public benefit under this subsection does not limit the obligation of a benefit corporation to create general public benefit.

SB298,5,23 (3) Effect of purposes. The creation of general public benefit and specific public benefit as provided in subs. (1) and (2) shall be considered to be in the best interests of the benefit corporation.

SB298,6,3 (4) Amendment. A benefit corporation may amend its articles to add, amend, or delete the identification of a specific public benefit that it is the purpose of the benefit corporation to create.

SB298,6,6 (5) Service corporations. A service corporation that is a benefit corporation is not limited by ss. 180.1903 and 180.1905 in its authority to create general public benefit or a specific public benefit.

SB298,6,7 SUBCHAPTER III

SB298,6,8 ACCOUNTABILITY

SB298,6,14 204.301 Standard of conduct for directors. (1) Consideration of interests. (a) Notwithstanding ss. 180.0302 (15) and 180.0827, in discharging the duties of their respective positions, the board of directors, committees of the board, and individual directors of a benefit corporation, in considering the best interests of the benefit corporation, shall consider the effects of any action or inaction on all of the following:

SB298,6,15 1. The shareholders of the benefit corporation.

SB298,6,17 2. The employees and workforce of the benefit corporation and its subsidiaries and suppliers.

SB298,6,19 3. The interests of customers as beneficiaries of the general public benefit or specific public benefit purposes of the benefit corporation.

SB298,6,22 4. Community and societal factors, including those of any community in which offices or facilities of the benefit corporation or its subsidiaries or suppliers are located.

SB298,6,23 5. The local and global environment.