Bill Text: MI HB5867 | 2017-2018 | 99th Legislature | Introduced


Bill Title: Businesses; business corporations; benefit corporations; authorize and establish duties of officers and directors. Amends 1972 PA 284 (MCL 450.1101 - 450.2098) by adding ch. 9A. TIE BAR WITH: HB 5868'18, HB 5869'18, HB 5872'18

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2018-04-25 - Bill Electronically Reproduced 04/24/2018 [HB5867 Detail]

Download: Michigan-2017-HB5867-Introduced.html

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE BILL No. 5867

 

 

April 24, 2018, Introduced by Reps. Greig, Sheppard, Vaupel, Green, Lasinski, Chang, Love, Cochran, Pagan, Hoadley, Hertel, Dianda, Zemke, Yanez, Brinks, Garrett, Lucido, Iden, LaGrand, Canfield, Inman, Faris and Sneller and referred to the Committee on Commerce and Trade.

 

     A bill to amend 1972 PA 284, entitled

 

"Business corporation act,"

 

(MCL 450.1101 to 450.2098) by adding chapter 9A.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

CHAPTER 9A

 

BENEFIT CORPORATIONS

 

     Sec. 951. (1) As used in this chapter:

 

     (a) "Benefit enforcement proceeding" means a claim asserted or

 

action brought directly by a benefit corporation, or derivatively

 

on behalf of a benefit corporation, against a director or officer

 

for any of the following:

 

     (i) A failure to pursue the general public benefit purpose of

 

a benefit corporation or any specific public benefit purpose set

 

forth in the articles of a benefit corporation.

 

     (ii) A violation of a duty or standard of conduct under this


chapter.

 

     (b) "General public benefit" means 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.

 

     (c) "Minimum status vote" means an authorization or approval

 

of a corporate action by the shareholders of a benefit corporation

 

that meets all of the following:

 

     (i) It meets the shareholder approval or vote requirements of

 

this act.

 

     (ii) It meets any shareholder approval or vote requirements

 

included in any provisions of the articles of incorporation.

 

     (iii) The shareholders of every class or series are entitled

 

to vote on the corporate action regardless of a limitation stated

 

in the articles of incorporation or bylaws on the voting rights of

 

any class or series.

 

     (iv) The corporate action is approved by vote of the

 

shareholders of each class or series entitled to cast at least 2/3

 

of the votes that all shareholders of the class or series are

 

entitled to cast on the action.

 

     (d) "Specific public benefit" includes, but is not limited to,

 

any of the following:

 

     (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) Preserving the environment.

 

     (iv) Improving human health.

 

     (v) Promoting the arts, sciences, or advancement of knowledge.

 

     (vi) Increasing the flow of capital to entities that have a

 

public benefit purpose.

 

     (vii) Conferring any other particular benefit on society or

 

the environment.

 

     (e) In relation to a person, "subsidiary" means an entity in

 

which the person owns beneficially or of record 50% or more of the

 

outstanding equity interests. For purposes of determining a

 

person's ownership percentage under this subdivision, any

 

outstanding rights to acquire equity interests in an entity are

 

considered outstanding equity interests in that entity.

 

     (f) "Third-party standard" means a standard for defining,

 

reporting, and assessing overall corporate social and environmental

 

performance that is all of the following:

 

     (i) Comprehensive, in that it assesses the effect of the

 

business and its operations on the interests listed in section

 

957(1)(a)(ii) to (v).

 

     (ii) Developed by an organization that is independent of the

 

benefit corporation and satisfies the following requirements:

 

     (A) Not more than 1/3 of the members of the governing body of

 

the organization are representatives of either of the following:

 

     (I) An association of businesses operating in a specific

 

industry if the performance of the member businesses is measured by

 

the standard.

 

     (II) Businesses whose performance is measured by the standard.


     (B) The organization is not materially financed by an

 

association or business described in sub-subparagraph (A).

 

     (iii) Credible, because the standard is developed by a person

 

that meets both of the following:

 

     (A) The person has access to necessary expertise to assess

 

overall corporate social and environmental performance.

 

     (B) The person uses a balanced multistakeholder approach that

 

includes a public comment period of at least 30 days to develop the

 

standard.

 

     (iv) Transparent, because all of the following are publicly

 

available:

 

     (A) The criteria considered in the standard when measuring the

 

overall social and environmental performance of a business, and the

 

relative weightings of those criteria.

 

     (B) The following information about the development and

 

revision of the standard:

 

     (I) The identity of the directors, officers, any material

 

owners, and the governing body of the organization that developed

 

and controls revisions to the standard.

 

     (II) The process by which revisions to the standard and

 

changes to the membership of the governing body are made.

 

     (III) An accounting of the sources of financial support for

 

the organization, with sufficient detail to disclose any

 

relationships that could reasonably be considered to present a

 

potential conflict of interest.

 

     (2) This chapter does not apply to any corporation that is not

 

a benefit corporation or to a corporation that terminates its


status as a benefit corporation under section 953(4).

 

     (3) If there is a conflict between a specific provision of

 

this chapter and a general provision of this act, the provision of

 

this chapter applies with respect to a benefit corporation.

 

     Sec. 953. (1) A domestic corporation that meets all of the

 

following is a benefit corporation and subject to this chapter:

 

     (a) The corporation is formed under this act.

 

     (b) The articles of the corporation state that it is a benefit

 

corporation. However, an amendment to the articles to include the

 

statement described in this subdivision is not effective unless it

 

is adopted by a minimum status vote. A shareholder that does not

 

vote for or consent in writing to the amendment may dissent under

 

section 762 and receive payment for the shares.

 

     (2) In addition to the purposes described in section 202(b),

 

the purposes of a benefit corporation may also include 1 or more

 

specific public benefits identified in the articles, but the

 

identification of a specific public benefit under this subdivision

 

does not limit the obligation of a benefit corporation to create

 

general public benefit.

 

     (3) An amendment to the articles of incorporation of a benefit

 

corporation to change the purposes of the corporation by adding,

 

amending, or deleting 1 or more specific public benefits is not

 

effective unless it is adopted by a minimum status vote. A

 

shareholder that does not vote for or consent in writing to the

 

amendment may dissent under section 762 and receive payment for the

 

shares.

 

     (4) A benefit corporation may terminate its status as a


benefit corporation by amending its articles to remove the

 

provisions described in this section. However, each of the

 

following applies to an amendment to the articles described in this

 

subsection:

 

     (a) The amendment is not effective unless it is adopted by a

 

minimum status vote.

 

     (b) A shareholder that does not vote for or consent in writing

 

to the amendment may dissent under section 762 and receive payment

 

for the shares.

 

     Sec. 955. (1) In addition to the requirements of chapter 7, if

 

a domestic corporation that is not a benefit corporation is a

 

constituent corporation in a merger or an exchanging corporation in

 

a share exchange, and the surviving or acquiring corporation will

 

be a benefit corporation under the plan of merger or share

 

exchange, the plan must be approved by a minimum status vote of

 

that constituent or exchanging corporation.

 

     (2) In addition to the requirements of chapter 7, a plan of

 

merger or share exchange that would have the effect of terminating

 

the status of a domestic corporation as a benefit corporation must

 

be approved by a minimum status vote of that corporation.

 

     (3) A shareholder of a corporation that is not a benefit

 

corporation may dissent under section 762 and receive payment for

 

the shares if the shareholder did not vote for or consent in

 

writing to a plan of merger or share exchange under subsection (1)

 

and the shareholder held the shares immediately before the

 

effective time of the merger or share exchange.

 

     Sec. 957. (1) All of the following apply to the board,


committees of the board, and individual directors of a benefit

 

corporation, and to any officer of a benefit corporation who has

 

discretion to act with respect to any matter if it reasonably

 

appears to the officer that the matter may have a material effect

 

on the creation of general public benefit or a specific public

 

benefit by the benefit corporation, in discharging the duties of

 

their respective positions and in considering the best interests of

 

the benefit corporation:

 

     (a) They shall consider the effects of any action on all of

 

the following:

 

     (i) The shareholders of the benefit corporation.

 

     (ii) The employees and work force of the benefit corporation

 

and its subsidiaries and suppliers.

 

     (iii) The interests of customers as beneficiaries of the

 

general public benefit and any specific public benefit included in

 

the purpose of the benefit corporation.

 

     (iv) Community and societal considerations, including those of

 

each community in which offices or facilities of the benefit

 

corporation and its subsidiaries and suppliers are located.

 

     (v) The local and global environment.

 

     (vi) 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 and the general public benefit and any specific public

 

benefit included in the purpose of the benefit corporation may be

 

best served by the continued independence of the benefit

 

corporation.


     (vii) The ability of the benefit corporation to accomplish

 

general public benefit and any specific public benefit included in

 

the purposes of the benefit corporation.

 

     (b) In evaluating a person's proposed acquisition of control

 

of the benefit corporation, they may consider, in addition to the

 

effects of the proposed acquisition on the persons, interests, or

 

factors described in subdivision (a)(i) to (vii), the resources,

 

intent, and conduct of the person seeking to acquire control of the

 

benefit corporation.

 

     (c) They may consider any other pertinent factors or the

 

interests of any other group that they consider appropriate.

 

     (d) They are not required to give priority to the interests of

 

a particular person or group described in subdivision (a), (b), or

 

(c) over the interests of any other person or group unless the

 

benefit corporation has stated its intention in its articles to

 

give priority to interests related to a specific public benefit

 

purpose identified in its articles.

 

     (2) The consideration of interests and factors by a director

 

or officer of a benefit corporation under subsection (1) in the

 

discharge of his or her duties does not constitute a violation of

 

section 541a.

 

     (3) A director or officer who makes a business judgment in

 

good faith fulfills his or her duties under this section if the

 

director or officer meets all of the following:

 

     (a) Is not interested in the subject of the business judgment.

 

     (b) Is informed with respect to the subject of the business

 

judgment to the extent the director reasonably believes to be


appropriate under the circumstances.

 

     (c) Rationally believes that the business judgment is in the

 

best interests of the benefit corporation.

 

     (4) A director of a benefit corporation is not liable for

 

monetary damages to the corporation, the shareholders, or any

 

person that claims to be a beneficiary of a general or specific

 

public benefit for a failure to fulfill a duty arising under this

 

chapter or solely because he or she performed duties in compliance

 

with this section.

 

     (5) A director or officer of a benefit corporation does not

 

have a duty to a person that is a beneficiary of the general or any

 

specific public benefit purposes of the benefit corporation arising

 

from the status of the person as a beneficiary.

 

     (6) Any corporate action taken by a benefit corporation to

 

advance general public benefit or any specific public benefit

 

included in the purpose of the corporation under section 953(2) is

 

presumed to be in the best interests of the benefit corporation.

 

     Sec. 959. (1) The duties of any directors and officers of a

 

benefit corporation arising under this chapter, or the general

 

public benefit purpose or any specific public benefit purpose of a

 

benefit corporation organized under this chapter, may be enforced

 

only in a benefit enforcement proceeding under this section. A

 

person shall not bring an action or assert a claim against a

 

benefit corporation or its directors or officers with respect to

 

the duties under this chapter of any directors or officers of the

 

benefit corporation or the general public benefit purpose or any

 

specific public benefit purpose of the benefit corporation


organized under this chapter except in a benefit enforcement

 

proceeding under this section.

 

     (2) A benefit enforcement proceeding against a benefit

 

corporation may be commenced or maintained only by 1 of the

 

following:

 

     (a) Directly, by the benefit corporation.

 

     (b) Derivatively, by any of the following:

 

     (i) A shareholder of the benefit corporation that owns

 

beneficially or of record, individually or collectively, as of the

 

date the benefit enforcement proceeding is instituted, either of

 

the following:

 

     (A) At least 2% of the corporation's outstanding shares.

 

     (B) If the shares of the benefit corporation are listed on a

 

national securities exchange, 2% of the corporation's outstanding

 

shares, or shares that have a market value of $2,000,000.00,

 

whichever is less.

 

     (ii) A director of the benefit corporation.

 

     (iii) A person or group of persons that owns beneficially or

 

of record 5% or more of the outstanding voting power in the

 

election of directors of an entity of which the benefit corporation

 

is a subsidiary or the right to receive 5% or more of the

 

distributions to shareholders made by an entity of which the

 

benefit corporation is a subsidiary.

 

     (iv) Any other person specified in the articles or bylaws of

 

the benefit corporation.

 

     (3) A benefit corporation is not liable for monetary damages

 

under this chapter for any failure of the benefit corporation to


pursue or create general public benefit or a specific public

 

benefit.

 

     (4) An action against a director or officer for failure to

 

perform any of the duties imposed under this section shall be

 

commenced within 3 years after the cause of action has accrued, or

 

within 2 years after the time when the cause of action is

 

discovered or should reasonably have been discovered by the

 

complainant, whichever occurs first.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.

 

     Enacting section 2. This amendatory act does not take effect

 

unless all of the following bills of the 99th Legislature are

 

enacted into law:

 

     (a) Senate Bill No. ____ or House Bill No. 5872 (request no.

 

00377'17).

 

     (b) Senate Bill No. ____ or House Bill No. 5868 (request no.

 

00830'17).

 

     (c) Senate Bill No. ____ or House Bill No. 5869 (request no.

 

00831'17).

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