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A BILL TO BE ENTITLED
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AN ACT
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relating to the formation of benefit corporations and to the |
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consideration of public benefits and other interests by officers |
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and directors of benefit corporations; providing for the imposition |
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of a fee. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter A, Chapter 3, Business Organizations |
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Code, is amended by adding Section 3.016 to read as follows: |
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Sec. 3.016. SUPPLEMENTAL PROVISION REQUIRED IN CERTIFICATE |
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OF FORMATION OF BENEFIT CORPORATION. In addition to the provisions |
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required or permitted to be stated in the certificate of formation |
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of a for-profit or professional corporation under Section 3.007 or |
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a close corporation under Section 3.008, the certificate of |
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formation of a benefit corporation, whether original, amended, or |
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restated, must include the sentence, "This corporation is a benefit |
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corporation." |
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SECTION 2. Chapter 21, Business Organizations Code, is |
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amended by adding Subchapter R to read as follows: |
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SUBCHAPTER R. BENEFIT CORPORATIONS |
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Sec. 21.851. APPLICABILITY; CONFLICT WITH OTHER CODE |
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PROVISIONS. (a) This subchapter applies only to a benefit |
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corporation. |
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(b) This chapter applies to a benefit corporation to the |
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extent not inconsistent with this subchapter. |
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(c) A benefit corporation may be subject simultaneously to |
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this subchapter and Subchapter O and Chapters 301, 302, and 303. To |
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the extent this subchapter conflicts with Subchapter O or Chapter |
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301, 302, or 303, this subchapter controls. |
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(d) A provision of the certificate of formation or bylaws of |
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a benefit corporation may not limit, be inconsistent with, or |
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supersede a provision of this chapter. |
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Sec. 21.852. DEFINITIONS. In this chapter: |
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(1) "Benefit corporation" means a domestic |
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corporation formed under this subchapter or governed by this |
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subchapter as provided by Section 21.854 or 21.855. |
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(2) "Benefit director" means: |
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(A) the director designated as the benefit |
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director of a benefit corporation under Section 21.859; or |
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(B) a person with one or more of the powers, |
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duties, or rights of a benefit director to the extent provided in |
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the bylaws. |
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(3) "Benefit enforcement proceeding" means a claim or |
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action for: |
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(A) failure of a benefit corporation to pursue or |
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create a general public benefit or a specific public benefit |
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purpose contained in the corporation's certificate of formation; or |
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(B) a violation of an obligation, duty, or |
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standard of conduct under this subchapter. |
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(4) "Benefit officer" means the person designated as |
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the benefit officer of a benefit corporation under Section 21.861. |
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(5) "General public benefit" means a material positive |
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impact on society and the environment, taken as a whole, assessed in |
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accordance with a third-party standard, from the business and |
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operations of a benefit corporation. |
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(6) "Publicly traded corporation" means a for-profit |
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corporation that has shares listed on a national securities |
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exchange or traded in a market maintained by one or more members of |
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a national securities association. |
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(7) "Specific public benefit" includes: |
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(A) providing low-income or underserved |
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individuals or communities with beneficial products or services; |
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(B) promoting economic opportunity for |
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individuals or communities beyond the creation of jobs in the |
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normal course of business; |
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(C) protecting or restoring the environment; |
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(D) improving human health; |
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(E) promoting the arts, sciences, or advancement |
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of knowledge; |
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(F) increasing the flow of capital to entities |
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with the purpose of benefiting society or the environment; and |
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(G) conferring any other particular benefit on |
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society or the environment. |
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(8) "Third-party standard" means a recognized |
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standard for defining, reporting, and assessing corporate social |
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and environmental performance that: |
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(A) is comprehensive because it assesses the |
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effect of the business and its operations on the interests listed in |
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Section 21.858(a)(1)(B), (C), (D), or (E); |
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(B) is developed by an entity not controlled by |
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the benefit corporation; |
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(C) is developed by an entity: |
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(i) with access to the expertise necessary |
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to assess overall corporate social and environmental performance; |
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and |
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(ii) using a balanced multi-stakeholder |
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approach to develop the standard, including a reasonable period for |
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public comment; and |
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(D) is transparent because the following |
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information about the standard is publicly available: |
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(i) the criteria considered when measuring |
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the overall social and environmental performance of a business; |
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(ii) the relative weight given to those |
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criteria, if any; |
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(iii) the identity of the directors, |
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officers, material owners, and members of the governing body of the |
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entity who develop and control changes to the standard; |
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(iv) the process by which changes to the |
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standard and to the membership of the governing body are made; and |
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(v) an accounting of the revenue and |
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sources of financial support for the entity, with sufficient detail |
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to disclose any relationships that could reasonably be considered |
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to present a potential conflict of interest. |
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Sec. 21.853. FORMATION OF BENEFIT CORPORATION. A benefit |
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corporation shall be formed in accordance with Chapter 3. |
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Sec. 21.854. ADOPTION OF AMENDMENT FOR BENEFIT CORPORATION |
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STATUS. A domestic corporation that is not a benefit corporation |
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may become a benefit corporation by amending its certificate of |
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formation in accordance with Chapter 3 to conform with Section |
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3.016. |
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Sec. 21.855. ADOPTION OF BENEFIT CORPORATION STATUS THROUGH |
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MERGER, EXCHANGE, OR CONVERSION. A surviving or new domestic |
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corporation resulting from a merger or conversion or a corporation |
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that is acquired under an interest exchange under Chapter 10 may |
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become a benefit corporation if, as part of the plan of merger, |
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exchange, or conversion, the certificate of formation conforms with |
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Section 3.016. |
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Sec. 21.856. TERMINATION OF BENEFIT CORPORATION STATUS. A |
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benefit corporation may terminate its status as a benefit |
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corporation by: |
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(1) amending the benefit corporation's certificate of |
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formation under Chapter 3 by deleting from the certificate of |
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formation the statement that it is a benefit corporation; or |
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(2) engaging in a merger, interest exchange, or |
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conversion under Chapter 10, unless the plan of merger, exchange, |
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or conversion provides that the surviving or new corporation will |
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continue as or become a benefit corporation. |
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Sec. 21.857. CORPORATE PURPOSES. (a) A benefit corporation |
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shall have a purpose of creating a general public benefit. This |
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purpose is in addition to its purpose under Chapter 2. |
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(b) The certificate of formation of a benefit corporation |
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may include or be amended to include one or more specific public |
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benefits that it is the purpose of the benefit corporation to create |
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in addition to the purposes of the corporation under Chapter 2 and |
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Subsection (a). The inclusion of a specific public benefit in a |
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corporation's certificate of formation as provided by this |
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subsection does not limit the duty of the benefit corporation to |
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create a general public benefit under Subsection (a). |
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(c) The creation of a general public benefit and specific |
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public benefit under this section is considered to be in the best |
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interests of the benefit corporation. |
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(d) A benefit corporation may amend its certificate of |
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formation under Subchapter B, Chapter 3, to add, amend, or delete a |
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specific public benefit that it is the purpose of the benefit |
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corporation to create. |
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(e) A benefit corporation that is a professional entity does |
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not violate Section 2.004 by having as a purpose the creation of a |
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general public benefit or specific public benefit. |
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Sec. 21.858. DIRECTOR'S DUTIES; STANDARD OF CONDUCT. (a) |
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In discharging the duties of their respective positions and in |
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considering the best interests of the benefit corporation, the |
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directors of a benefit corporation, individually or as members of a |
|
|
committee: |
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(1) shall consider the effects of any action or |
|
|
decision not to take action on: |
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(A) the shareholders of the benefit corporation; |
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(B) the employees and workforce of the benefit |
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corporation and the corporation's subsidiaries and suppliers; |
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(C) the interests of customers as beneficiaries |
|
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of the general public benefit or specific public benefit purpose of |
|
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the benefit corporation; |
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(D) community and societal factors, including |
|
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those of each community in which offices or facilities of the |
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benefit corporation or the corporation's subsidiaries or suppliers |
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are located; |
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(E) the local and global environment; |
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(F) the short-term and long-term interests of the |
|
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benefit corporation, including benefits that may accrue to the |
|
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benefit corporation from its long-term plans and the possibility |
|
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that these interests may be best served by the continued |
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independence of the benefit corporation; and |
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(G) the ability of the benefit corporation to |
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accomplish its general public benefit purpose and any specific |
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public benefit purpose; |
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(2) may consider any other pertinent factors or the |
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interests of any other group that the directors determine are |
|
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appropriate to consider; and |
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(3) are not required to give priority to the interests |
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of a particular person or group referred to in Subdivision (1) over |
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the interests of any other person or group unless the benefit |
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corporation has stated in the corporation's certificate of |
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formation its intention to give priority to certain interests |
|
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related to the accomplishment of its general public benefit purpose |
|
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or of a specific public benefit purpose identified in the |
|
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corporation's certificate of formation. |
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(b) The consideration of interests and factors in the manner |
|
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required by Subsection (a) does not constitute a violation of the |
|
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duties of the directors. |
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(c) Except as provided by the certificate of formation, a |
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director is not personally liable for monetary damages for: |
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(1) any action or decision not to take action in the |
|
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course of performing the duties of a director under Subsection (a) |
|
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if the director performed the duties of office in compliance with |
|
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this section; or |
|
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(2) failure of the benefit corporation to pursue or |
|
|
create a general public benefit or specific public benefit. |
|
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(d) A director does not owe a duty to a person that is a |
|
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beneficiary of the general public benefit purpose or a specific |
|
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public benefit purpose of a benefit corporation arising from the |
|
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person's status as a beneficiary. |
|
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(e) A director who makes a business judgment in good faith |
|
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fulfills the director's duty under this section if the director: |
|
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(1) is not interested in the subject of the business |
|
|
judgment; |
|
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(2) is informed with respect to the subject of the |
|
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business judgment to the extent the director reasonably believes to |
|
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be appropriate under the circumstances; and |
|
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(3) rationally believes that the business judgment is |
|
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in the best interests of the benefit corporation. |
|
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Sec. 21.859. BENEFIT DIRECTOR. (a) The board of directors |
|
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of a benefit corporation that is a publicly traded corporation |
|
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shall, and the board of directors of any other benefit corporation |
|
|
may, include a director who: |
|
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(1) is designated as the benefit director; and |
|
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(2) in addition to the powers, duties, rights, and |
|
|
immunities of the other directors of the benefit corporation, has |
|
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the powers, duties, rights, and immunities conferred or provided by |
|
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this subchapter. |
|
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(b) The benefit director shall be elected, and may be |
|
|
removed, in the manner provided by Subchapter I, Chapter 21. Except |
|
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as provided by Subsection (f), the benefit director must be a person |
|
|
who is independent. The benefit director may serve as the |
|
|
corporation's benefit officer at the same time the person is |
|
|
serving as the benefit director. The certificate of formation or |
|
|
bylaws of a benefit corporation may prescribe additional |
|
|
qualifications of the benefit director not inconsistent with this |
|
|
subsection. |
|
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(c) The benefit director shall prepare, and the benefit |
|
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corporation shall include in the annual benefit report to |
|
|
shareholders required by Section 21.864: |
|
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(1) the opinion of the benefit director with respect |
|
|
to: |
|
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(A) whether the benefit corporation acted in |
|
|
accordance with its general public benefit purpose and any specific |
|
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public benefit purpose in all material respects during the period |
|
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covered by the report; and |
|
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(B) whether the directors and officers complied |
|
|
with Sections 21.858(a) and 21.860(a), respectively; and |
|
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(2) if, in the opinion of the benefit director, the |
|
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benefit corporation or the directors or officers of the corporation |
|
|
failed to act or comply in the manner described by Subdivision |
|
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(1)(A) or (B), a description of the ways in which the benefit |
|
|
corporation or the directors or officers failed to act or comply |
|
|
with each particular provision. |
|
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(d) The action or decision not to take action of an |
|
|
individual in the person's capacity as a benefit director |
|
|
constitutes for all purposes an action or decision not to take |
|
|
action of that person in the person's capacity as a director of the |
|
|
benefit corporation. |
|
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(e) Regardless of whether the certificate of formation of a |
|
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benefit corporation includes a provision limiting or restricting |
|
|
the personal liability of directors authorized by Section 7.001, a |
|
|
benefit director may not be held personally liable for an act or |
|
|
omission in the person's capacity as a benefit director unless the |
|
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act or omission constitutes intentional misconduct or a knowing |
|
|
violation of a law. |
|
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(f) The benefit director of a professional corporation is |
|
|
not required to be independent. |
|
|
Sec. 21.860. STANDARD OF CONDUCT FOR OFFICERS. (a) Each |
|
|
officer of a benefit corporation shall consider the interests and |
|
|
factors described by Section 21.858(a) in the manner provided by |
|
|
that subsection if: |
|
|
(1) the officer has discretion to act with respect to a |
|
|
matter; and |
|
|
(2) it reasonably appears to the officer that the |
|
|
matter may have a material effect on the creation by the benefit |
|
|
corporation of a general public benefit or any specific public |
|
|
benefit included in the certificate of formation of the benefit |
|
|
corporation. |
|
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(b) The consideration of interests and factors by an officer |
|
|
of a benefit corporation in the manner required by Subsection (a) |
|
|
does not constitute a violation of the duties of an officer. |
|
|
(c) Except as provided by the certificate of formation, an |
|
|
officer is not personally liable for monetary damages for: |
|
|
(1) any action taken or decision not to take action in |
|
|
the course of performing the duties of an officer under Subsection |
|
|
(a) if the officer performed the duties of the position in |
|
|
compliance with this section; or |
|
|
(2) failure of the benefit corporation to pursue or |
|
|
create a general public benefit or specific public benefit. |
|
|
(d) An officer does not owe a duty to a person that is a |
|
|
beneficiary of the general public benefit purpose or a specific |
|
|
public benefit purpose of a benefit corporation arising from the |
|
|
person's status as a beneficiary. |
|
|
(e) An officer who makes a business judgment in good faith |
|
|
fulfills the officer's duty under this section if the officer: |
|
|
(1) is not interested in the subject of the business |
|
|
judgment; |
|
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(2) is informed with respect to the subject of the |
|
|
business judgment to the extent the officer reasonably believes to |
|
|
be appropriate under the circumstances; and |
|
|
(3) rationally believes that the business judgment is |
|
|
in the best interests of the benefit corporation. |
|
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Sec. 21.861. BENEFIT OFFICER. (a) A benefit corporation |
|
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may have an officer designated as the benefit officer. |
|
|
(b) A benefit officer: |
|
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(1) has the powers and duties relating to the purpose |
|
|
of the corporation to create a general public benefit or specific |
|
|
public benefit provided by the bylaws or, absent a controlling |
|
|
provision in the bylaws, by a resolution or order of the board of |
|
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directors; and |
|
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(2) shall prepare the benefit report required by |
|
|
Section 21.864. |
|
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Sec. 21.862. PERSON WHO IS INDEPENDENT FROM BENEFIT |
|
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CORPORATION OR SUBSIDIARY. (a) For purposes of this subchapter, a |
|
|
person is considered to be independent of a benefit corporation or a |
|
|
subsidiary of the corporation if the person has no material |
|
|
relationship with the benefit corporation or its subsidiary. |
|
|
(b) Serving as benefit director or benefit officer does not |
|
|
make a person not independent. |
|
|
(c) A material relationship between an individual and a |
|
|
benefit corporation or any of the corporation's subsidiaries will |
|
|
be conclusively presumed to exist under Subsection (a) if: |
|
|
(1) within the preceding three years, the individual |
|
|
is or has been an employee, other than a benefit officer, of the |
|
|
benefit corporation or subsidiary; |
|
|
(2) within the preceding three years, an immediate |
|
|
family member of the individual is or has been an executive officer, |
|
|
other than a benefit officer, of the benefit corporation or |
|
|
subsidiary; or |
|
|
(3) the individual or an entity of which the |
|
|
individual is a director, officer, or manager owns beneficially or |
|
|
of record five percent or more of the outstanding shares of the |
|
|
benefit corporation, calculated as if all outstanding rights to |
|
|
acquire equity interests in the benefit corporation had been |
|
|
exercised, or the individual owns beneficially or of record five |
|
|
percent or more of the outstanding equity interests of the benefit |
|
|
corporation, calculated as if all outstanding rights to acquire |
|
|
equity interests in the equity had been exercised. |
|
|
Sec. 21.863. RIGHT OF ACTION. (a) Except in a benefit |
|
|
enforcement proceeding, a person may not bring an action or assert a |
|
|
claim against a benefit corporation or the corporation's directors |
|
|
or officers for: |
|
|
(1) failure to pursue or create a general public |
|
|
benefit or specific public benefit set forth in the corporation's |
|
|
certificate of formation; or |
|
|
(2) a violation of an obligation, duty, or standard of |
|
|
conduct under this subchapter. |
|
|
(b) A benefit enforcement proceeding may be commenced or |
|
|
maintained: |
|
|
(1) directly only by the benefit corporation; or |
|
|
(2) derivatively in accordance with Subchapter L, |
|
|
Chapter 21, only by: |
|
|
(A) a person or group of persons that owned |
|
|
beneficially or of record at least two percent of the total number |
|
|
of shares of a class or series outstanding at the time of the act or |
|
|
omission that is the subject of the complaint; |
|
|
(B) a director of the benefit corporation; |
|
|
(C) a person or group of persons that owned |
|
|
beneficially or of record five percent or more of the outstanding |
|
|
equity interests in an entity of which the benefit corporation is a |
|
|
subsidiary at the time of the act or omission that is the subject of |
|
|
the complaint; or |
|
|
(D) other persons as specified in the certificate |
|
|
of formation. |
|
|
(c) For purposes of this section, a person is the beneficial |
|
|
owner of shares or equity interests if the shares or equity |
|
|
interests are held in a voting trust or by a nominee on behalf of the |
|
|
beneficial owner. |
|
|
(d) A benefit corporation is not liable for monetary damages |
|
|
under this subchapter for any failure of the benefit corporation to |
|
|
pursue or create a general public benefit or specific public |
|
|
benefit. |
|
|
Sec. 21.864. PREPARATION OF ANNUAL BENEFIT REPORT. (a) A |
|
|
benefit corporation shall prepare an annual benefit report. The |
|
|
report must include: |
|
|
(1) a description of: |
|
|
(A) the ways in which the corporation pursued a |
|
|
general public benefit during the preceding fiscal year and the |
|
|
extent to which the general public benefit was created; |
|
|
(B) the ways in which the corporation pursued the |
|
|
creation of any specific public benefit included as a purpose of the |
|
|
corporation in the certificate of formation and the extent to which |
|
|
that specific public benefit was created; |
|
|
(C) any circumstances that may have hindered the |
|
|
corporation's creation of a general public benefit or specific |
|
|
public benefit; and |
|
|
(D) the process and rationale for selecting or |
|
|
changing the third-party standard used to prepare the benefit |
|
|
report; |
|
|
(2) an assessment of the overall social and |
|
|
environmental performance of the benefit corporation prepared in |
|
|
accordance with a third-party standard: |
|
|
(A) applied in a manner that is consistent with |
|
|
any application of that standard in prior benefit reports, if any; |
|
|
or |
|
|
(B) if applied inconsistently, accompanied by an |
|
|
explanation of the reasons for the inconsistent application or |
|
|
accompanied by the change to that standard from the one used in the |
|
|
prior year's report; |
|
|
(3) the name of the benefit director and the benefit |
|
|
officer, if any, and the address to which correspondence to each of |
|
|
them may be mailed; |
|
|
(4) the compensation paid by the benefit corporation |
|
|
during the year to each director in the person's capacity as a |
|
|
director; |
|
|
(5) the opinion of the benefit director described by |
|
|
Section 21.859(c); and |
|
|
(6) a statement of any connection between the |
|
|
organization that established the third-party standard, or its |
|
|
directors, officers, or any holder of five percent or more of the |
|
|
governance interests in the organization, and the benefit |
|
|
corporation or its directors, officers, or any holder of five |
|
|
percent or more of the outstanding shares of the benefit |
|
|
corporation, including any financial or governance relationship |
|
|
that might materially affect the credibility of the use of the |
|
|
third-party standard. |
|
|
(b) If, during the reporting period of a benefit report, a |
|
|
benefit director resigned from or refused to seek reelection to the |
|
|
position of benefit director or was removed from the position of |
|
|
benefit director, and the benefit director furnished the benefit |
|
|
corporation with any written correspondence concerning the |
|
|
circumstances surrounding the resignation, refusal, or removal, |
|
|
the benefit report shall include that correspondence as an exhibit. |
|
|
(c) A benefit report or the assessment of the performance of |
|
|
the benefit corporation in the benefit report required by |
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Subsection (a)(2) is not required to be audited or certified by a |
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third-party standards provider. |
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Sec. 21.865. AVAILABILITY OF ANNUAL BENEFIT REPORT. (a) A |
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benefit corporation shall deliver the annual benefit report |
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prepared under Section 21.864 to each shareholder: |
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(1) not later than the 120th day after the last day of |
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|
the fiscal year of the benefit corporation; or |
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|
(2) at the same time the benefit corporation delivers |
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|
any other annual report to the corporation's shareholders. |
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(b) A benefit corporation shall: |
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(1) post all annual benefit reports on the portion of |
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|
the corporation's Internet website accessible by the public, if |
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any; and |
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(2) if the corporation does not have an Internet |
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|
website accessible by the public, provide a copy of the most recent |
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|
benefit report, without charge, to any member of the public who |
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|
requests a copy. |
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|
(c) Concurrently with the delivery of the benefit report to |
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|
shareholders under Subsection (b), the benefit corporation shall |
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|
deliver a copy of the benefit report to the secretary of state for |
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|
filing. The secretary of state shall impose a fee of $15 for filing |
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|
a benefit report. |
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(d) A benefit corporation may omit from a benefit report |
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provided under Subsection (b)(1) or (2) or (c) the amount of |
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|
compensation paid to directors and financial or proprietary |
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|
information included in the report. |
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SECTION 3. This Act takes effect September 1, 2013. |