Bill Text: CT HB05466 | 2012 | General Assembly | Comm Sub
Bill Title: An Act Concerning Social Enterprise Businesses.
Spectrum: Moderate Partisan Bill (Democrat 7-1)
Status: (Introduced - Dead) 2012-05-01 - Tabled for the Calendar, House [HB05466 Detail]
Download: Connecticut-2012-HB05466-Comm_Sub.html
General Assembly |
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February Session, 2012 |
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AN ACT CONCERNING SOCIAL ENTERPRISE BUSINESSES.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. (NEW) (Effective January 1, 2013) As used in this section and sections 2 to 9, inclusive, of this act:
(1) "Social enterprise business" means a corporation, as defined in section 33-602 of the general statutes, provided such corporation has the primary purpose of creating a social benefit;
(2) "Social benefit" means a material positive impact on society or the environment through one or more specific public benefits;
(3) "Specific public benefit" means:
(A) Providing low income or underserved individuals or communities with beneficial products or services;
(B) Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business;
(C) Preserving or improving the environment;
(D) Improving human health;
(E) Promoting the arts or sciences or the advancement of knowledge;
(F) Increasing the flow of capital to entities with a social benefit purpose;
(G) Accomplishing any other identifiable benefit for society or the environment; or
(H) Significantly furthering the accomplishment of one or more charitable, cultural, scientific, literary or educational purposes within the meaning of section 170(c)(2)(B) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time;
(4) "Subsidiary" means an entity that the social enterprise business owns beneficially or of record fifty per cent or more of the equity interests;
(5) "Independent", for purposes of third parties in relationship to a social enterprise business, means having no material relationship with a social enterprise business or any of its subsidiaries, other than the relationship of serving as the director or officer of a social enterprise business, either directly or as an owner or manager of an entity that has a material relationship with the social enterprise business or any of its subsidiaries;
(6) "Material relationship" means a relationship between a person and a social enterprise business or any of its subsidiaries in which:
(A) The person is, or has been within the last three years, an employee of the social enterprise business or any of its subsidiaries;
(B) An immediate family member of the person is, or has been within the last three years, an executive officer of the social enterprise business or any of its subsidiaries; or
(C) The person or an entity of which the person is a manager or in which the person owns beneficially or of record five per cent or more of the equity interests owns beneficially or of record five per cent or more of the shares of the social enterprise business;
(7) "Third-party standard" means a recognized standard for defining, reporting and assessing corporate social and environmental performance that is: (A) Developed by an organization that is independent of the social enterprise business; and (B) easily understood because the following information concerning the standard is publicly available: (i) The factors considered when measuring the performance of a business; (ii) the relative weightings of those factors; and (iii) the identity of the persons that develop and control changes to the standard and the process by which those changes are made; and
(8) "Benefit enforcement proceeding" means a claim or action against a director or officer for:
(A) Failure to pursue the public social benefit purpose of the social enterprise business or any specific public benefit purpose set forth in its articles of incorporation; or
(B) Violation of a duty or standard of conduct under sections 1 to 9, inclusive, of this act.
Sec. 2. (NEW) (Effective January 1, 2013) (a) Any corporation organized pursuant to sections 33-635, 33-636, 33-637 and 33-639 of the general statutes may become a social enterprise business, as defined in section 1 of this act, by (1) amending its articles of incorporation and bylaws, as appropriate, to add a statement of social benefit; or (2) being a party to a plan of merger, adopted pursuant to chapter 601 of the general statutes, or share exchange in which the surviving corporation will be a social enterprise business.
(b) Such amendment or plan of merger shall be adopted and shall become effective in accordance with sections 33-795 to 33-803, inclusive, of the general statutes, provided:
(1) The notice of the shareholders' meeting to approve an amendment or plan of merger made pursuant to this section shall include a statement from the board of directors regarding (A) the reason why the board is proposing the amendment or plan of merger; and (B) the anticipated effect on shareholders of becoming a social enterprise business; and
(2) The amendment or plan of merger shall be approved by the higher of (A) the vote required by the articles of incorporation; or (B) two-thirds of the votes entitled to be cast by the outstanding shares of the corporation, provided if any class of shares is entitled to vote as a group, approval shall also require the affirmative vote of the holders of at least two-thirds of the votes entitled to be cast by the outstanding shares of each voting group.
(c) Any shareholder not voting in favor of an amendment or plan of merger pursuant to this section may require the social enterprise business to purchase for cash at their fair market value the shares owned by such shareholder.
Sec. 3. (NEW) (Effective January 1, 2013) (a) The articles of incorporation of a social enterprise business, as defined in section 1 of this act, may identify one or more specific public benefits in addition to the social enterprise business's purposes under section 33-645 of the general statutes. The adoption of a specific public benefit purpose under this section shall not limit the obligation of a social enterprise business to create a social benefit.
(b) A social enterprise business may amend its articles of incorporation to add, amend or delete a specific public benefit, provided there shall always be at least one specific public benefit. Any such amendment shall be adopted and become effective in accordance with sections 33-795 to 33-803, inclusive, of the general statutes.
(c) No social enterprise business shall have as a specific public benefit a political or legislative purpose, as defined in Section 170(c)(2)(D) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time.
(d) A social enterprise business shall at all times maintain and enforce an ethical code of conduct and conflict of interest policy consistent with the highest and best business practices in the industry in which it conducts its business.
Sec. 4. (NEW) (Effective January 1, 2013) A social enterprise business shall distribute at least twenty per cent of any distributed profits to a charitable organization that serves the business's specific public benefit.
Sec. 5. (NEW) (Effective January 1, 2013) (a) Each director of a social enterprise business, as defined in section 1 of this act, in discharging his or her duties as a director:
(1) Shall, in determining what the director reasonably believes to be in the best interests of the social enterprise business, consider the effects of any action or inaction upon the:
(A) Shareholders of the social enterprise business;
(B) Employees and workforce of the social enterprise business and its subsidiaries and suppliers;
(C) Interests of customers to the extent they are beneficiaries of the social benefit or specific public benefit purposes of the social enterprise business;
(D) Community and social considerations, including those of any community in which offices or facilities of the social enterprise business or its subsidiaries or suppliers are located;
(E) Local and global environment; and
(F) Long-term and short-term interests of the social enterprise business, including the possibility that those interests may be best served by the continued independence of the social enterprise business;
(2) Shall not be required to give priority to the interests of any particular person or group referred to in this subsection over the interests of any other person or group unless the social enterprise business has stated its intention to give priority to interests related to its specific public benefit purpose in its articles of incorporation; and
(3) Shall not be subject to a different or higher standard of care when an action or inaction might affect control of the social enterprise business.
(b) The consideration of interests and factors as described in subsection (a) of this section shall not constitute a violation of section 33-756 of the general statutes.
(c) A director shall not be liable if a social enterprise business fails to create a social benefit or specific public benefit.
(d) A director shall not be liable to the social enterprise business or any person entitled to bring a benefit enforcement proceeding for any action or failure to take action in his or her official capacity if such director performed the duties of his or her office in compliance with this section and section 33-756 of the general statutes.
(e) A director of a social enterprise business shall have a fiduciary duty only to those persons entitled to bring a benefit enforcement proceeding against the social enterprise business. A director of a social enterprise business shall not have any fiduciary duty to a person who is a beneficiary of a social benefit or specific public benefit purpose of the social enterprise business arising only from the person's status as a beneficiary.
Sec. 6. (NEW) (Effective January 1, 2013) (a) An officer of a social enterprise business shall consider the interests and factors described in subsection (a) of section 5 of this act in the manner provided in said subsection (a) when:
(1) The officer has discretion in how to act or not act with respect to a matter; and
(2) It reasonably appears to the officer that the matter may have a material effect on:
(A) The creation of a social benefit or specific public benefit by the social enterprise business; or
(B) Any of the interests or factors referred to in subsection (a) of section 5 of this act.
(b) The consideration of interests and factors in the manner described in subsection (a) of this section shall not constitute a violation of the fiduciary duty of an officer to the social enterprise business.
(c) An officer shall not be liable to the social enterprise business or any person entitled to bring a benefit enforcement proceeding for any action or failure to take action in his or her official capacity if the officer performed the duties of the position in compliance with this section and sections 33-763 and 33-764 of the general statutes.
(d) An officer of a social enterprise business shall have no liability for actions taken that the officer believes, in his or her good faith business judgment, are consistent with (1) the general public benefit or any specific public benefit specified in the certificate of incorporation or bylaws or otherwise adopted by the board of directors, and (2) the requirements of any third-party standard in effect for the social enterprise business.
(e) An officer of a social enterprise business shall have a fiduciary duty only to those persons entitled to bring a benefit enforcement proceeding against the social enterprise business. An officer of a social enterprise business shall not have any fiduciary duty to a person that is a beneficiary of the social benefit or specific public benefit purposes of the social enterprise business arising only from the person's status as a beneficiary.
Sec. 7. (NEW) (Effective January 1, 2013) A social enterprise business, as defined in section 1 of this act, may designate a social enterprise officer who shall have the authority and shall perform the duties in the management of the social enterprise business relating to the purpose of the corporation to create public benefit as set forth in the bylaws, or to the extent not inconsistent with the bylaws, prescribed by the board of directors or by direction of an officer authorized by the board of directors to prescribe the duties of the office.
Sec. 8. (NEW) (Effective January 1, 2013) (a) The duties of directors and officers of a social enterprise business, as defined in section 1 of this act, and the social benefit and specific public benefit purposes of a social enterprise business may be enforced only in a benefit enforcement proceeding and no person may bring such an action or claim against a social enterprise business or its directors or officers except as provided in this section.
(b) A benefit enforcement proceeding may be commenced or maintained only by:
(1) A shareholder who would otherwise be entitled to commence or maintain a proceeding in the right of the social enterprise business on any basis;
(2) A director of the social enterprise business;
(3) A person or group of persons who owns beneficially or of record ten per cent or more of the equity interests in an entity of which the social enterprise business is a subsidiary; or
(4) Such other persons or entities as may be specified in the articles of incorporation of the social enterprise business.
Sec. 9. (NEW) (Effective January 1, 2013) (a) A social enterprise business shall deliver to each shareholder, in a format approved by the directors, an annual benefit report, which shall include:
(1) A statement of the specific goals or outcomes identified by the social enterprise business for creating social benefit and any specific public benefit for the period of the benefit report;
(2) A description of the actions taken by the social enterprise business to attain the identified goals or outcomes and the extent to which the goals or outcomes were attained;
(3) A description of any circumstances that hindered the attainment of the identified goals or outcomes and the creation of social benefit or any specific public benefit;
(4) Specific actions the social enterprise business will take to improve its social and environmental performance and attain the goals or outcomes identified for creating social benefit and any specific public benefit;
(5) An assessment of the social and environmental performance of the social enterprise business prepared in accordance with a third-party standard that has been applied consistently with prior benefit reports or accompanied by an explanation of the reasons for any inconsistent application;
(6) A statement of specific goals or outcomes identified by the social enterprise business and approved by the shareholders for creating social benefit and any specific public benefit for the period of the next benefit report;
(7) The name of each social enterprise director and the social enterprise officer, if any, and the address to which correspondence to each of them may be directed;
(8) A budget and balance sheet, including the accounting method used;
(9) A copy of the compensation plan;
(10) Disclosure of all financial investors;
(11) The compensation paid by the social enterprise business during the year to each director and a list of the one per cent most highly compensated employees;
(12) Code of conduct and conflict of interest policies; and
(13) The name of each person that owns beneficially or of record five per cent or more of the shares of the social enterprise business.
(b) A social enterprise business shall annually deliver and publish via its web site the benefit report to each shareholder within one hundred twenty days of the end of the fiscal year of the social enterprise business or at the same time that the social enterprise business delivers any other annual report to its shareholders.
(c) Concurrently with the delivery of the benefit report to shareholders as provided in subsection (b) of this section, the social enterprise business shall deliver a copy of the benefit report to the office of the Secretary of the State for filing.
(d) Every five years, the social enterprise business shall obtain an independent third party to review the benefit report and conduct an assessment of the social enterprise business's social benefit and specific public benefit to ensure compliance and consistency with the articles of incorporation.
Sec. 10. (NEW) (Effective January 1, 2013) Notwithstanding the provisions of sections 33-880 to 33-900, inclusive, of the general statutes, the assets of a social enterprise business that dissolves pursuant to chapter 601 of the general statutes shall be applied and distributed as follows: (1) All liabilities and other obligations of the social enterprise business shall be paid, satisfied and discharged, or adequate provision shall be made therefor, and (2) assets received and held by the corporation shall be transferred or conveyed to one or more social enterprise businesses or charitable organizations with a similar social benefit as the social enterprise business being dissolved.
This act shall take effect as follows and shall amend the following sections: | ||
Section 1 |
January 1, 2013 |
New section |
Sec. 2 |
January 1, 2013 |
New section |
Sec. 3 |
January 1, 2013 |
New section |
Sec. 4 |
January 1, 2013 |
New section |
Sec. 5 |
January 1, 2013 |
New section |
Sec. 6 |
January 1, 2013 |
New section |
Sec. 7 |
January 1, 2013 |
New section |
Sec. 8 |
January 1, 2013 |
New section |
Sec. 9 |
January 1, 2013 |
New section |
Sec. 10 |
January 1, 2013 |
New section |
CE |
Joint Favorable Subst. |
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APP |
Joint Favorable |
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JUD |
Joint Favorable |