Section 2. As used in this chapter, the following words shall, unless the context otherwise requires, have the following meanings:—

Ask a business law question, get an answer ASAP!
Thousands of highly rated, verified business lawyers.
Click here to chat with a lawyer about your rights.

”Benefit corporation”, a corporation incorporated under chapter 156A or chapter 156D that has elected to be a benefit corporation under section 4 or 5 and has not ceased to be a benefit corporation by terminating its benefit corporation status underof section 6.

”Benefit director”, either: (i) the director designated as the benefit director of a benefit corporation under subsection (a) of section 11; or (ii) a person with any of the powers, duties or rights of a benefit director to the extent provided in the bylaws underto subsection (e) of section 11.

”Benefit enforcement proceeding”, a claim or action brought directly by a benefit corporation, or derivatively as authorized by this chapter on behalf of a benefit corporation, against a director or officer for: (i) failure to pursue the general public benefit purpose of the benefit corporation or a specific public benefit purpose set forth in its articles; or (ii) a violation of any obligation, duty or standard of conduct under this chapter.

”Benefit officer”, the individual designated as the benefit officer of a benefit corporation under section 13.

”General public benefit”, a material, positive impact on society and the environment, taken as a whole, as measured by a third-party standard, from the business and operations of a benefit corporation.

”Independent”, having no material relationship with a benefit corporation or a subsidiary of the benefit corporation; provided, however, that serving as a benefit director or benefit officer shall not preclude a person from being independent; provided further, that a material relationship between a person and a benefit corporation or any of its subsidiaries shall be presumed to exist if 1 or more of the following apply: (1) the person is, or has been within the last year, an employee other than a benefit officer of the benefit corporation or a subsidiary of the benefit corporation;;(2) an immediate family member of the person is, or has been within the last year, an executive officer other than a benefit officer of the benefit corporation or its subsidiary; (3) there is beneficial or record ownership of 5 per cent or more of the outstanding shares of the benefit corporation by: (i) the person; or (ii) an association of which the person is a director, an officer or a manager or in which the person owns beneficially or of record 5 per cent or more of the outstanding equity interests.

”Minimum status vote”, (1) in the case of a business corporation, in addition to any other required approval or vote, the satisfaction of the following conditions: (i) the holders of every class or series shall be entitled to vote on the corporate action regardless of a limitation stated in the articles of organization or bylaws on the voting rights of any class or series; and (ii) the corporate action shall be approved by the affirmative vote of the shareholders of each class or series entitled to cast at least two-thirds of the votes that all shareholders of the class or series are entitled to cast on the action; (2) in the case of a domestic entity other than a business corporation, in addition to any other required approval, vote or consent, the satisfaction of the following conditions:

(i) the holders of every class or series of equity interest in the entity that are entitled to receive a distribution of any kind from the entity shall be entitled to vote on or consent to the action regardless of any otherwise applicable limitation on the voting or consent rights of any class or series; and

(ii) the action shall be approved by the affirmative vote or consent of the holders described in clause (1) entitled to cast at least two-thirds of the votes or consents that all of those holders are entitled to cast on the action.

”Specific public benefit”, any 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) promoting the preservation and conservation of the environment; (4) improving human health; (5) promoting the arts, sciences, access to and advancement of knowledge; (6) increasing or facilitating the flow of capital and assets to entities with a general public benefit purpose; or (7) conferring any other particular benefit on society or the environment.

”Third-party standard”, a standard for defining, reporting and assessing overall corporate social and environmental performance which is: (1) comprehensive in that it assesses the effect of the business and its operations upon the interests listed in subclauses (ii), (iii), (iv) and (v) of clause (1) of subsection (a) of section 10; (2) developed or performed by a person or organization independent of the benefit corporation and not more than one-third of the members of the governing body of the organization are representatives of any of the following: (i) an association of businesses operating in a specific industry the performance of whose members is measured by the standard; (ii) a business from a specific industry or an association of businesses in that industry; or (iii) a business whose performance is assessed against the standard; (3) not materially financed by an association of business described in clause (2); (4) credible because the standard is developed by a person that: (i) has access to necessary expertise to assess overall corporate social and environmental performance; and (ii) uses a balanced multi-stakeholder approach, including a public comment period of at least 30 days to develop the standard; (5) transparent, because the following information is publicly available about the standard: (i) the criteria considered when measuring the overall social and environmental performance of a business; (ii) the relative weighting of those criteria; (iii) the identity of the directors, officers, material owners and governing body of the organization that developed and control revisions to the standard; and (iv) an accounting of the sources of financial support for the organization, with sufficient detail to disclose any relationship that could reasonably be considered to present a potential conflict of interest.