Rhode Island General Laws 7-5.3-9. Standard of conduct for officers
(a) Each officer of a benefit corporation shall consider the interests and factors described in § 7-5.3-7(a) in the manner provided in 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 general public benefit or a specific public benefit identified in the articles of incorporation of the benefit corporation.
Terms Used In Rhode Island General Laws 7-5.3-9
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Benefit corporation: means a corporation for profit with purposes set forth in Rhode Island General Laws 7-5.3-2
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- General public benefit: means a material positive impact on society and the environment, taken as a whole, assessed against a third-party standard, from the business and operations of a benefit corporation. See Rhode Island General Laws 7-5.3-2
- person: may be construed to extend to and include co-partnerships and bodies corporate and politic. See Rhode Island General Laws 43-3-6
- Specific public benefit: includes :
(i) Providing low-income or underserved individuals or communities with beneficial products or services;
(ii) Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business;
(iii) Protecting or restoring the environment;
(iv) Improving human health;
(v) Promoting the arts, sciences, or advancement of knowledge;
(vi) Increasing the flow of capital to entities with a purpose to benefit society or the environment; and
(vii) Conferring any other particular benefit on society or the environment. See Rhode Island General Laws 7-5.3-2
(b) The consideration by an officer of interests and factors in the manner described in subsection (a) shall not constitute a violation of the duties of the officer.
(c) Except as provided in the articles of incorporation, an officer is not personally liable for monetary damages for:
(1) An action or inaction as an officer 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 § 7-1.2-812(b) and this section; or
(2) Failure of the benefit corporation to pursue or create a general public benefit or a specific public benefit.
(d) An officer does not have 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 status of the person as a beneficiary.
(e) An officer who makes a business judgment in good faith fulfills the duty under this section if the officer:
(1) Is not interested in the subject of the business judgment;
(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.
History of Section.
P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1.