Bill Text: NC H616 | 2017-2018 | Regular Session | Amended


Bill Title: North Carolina Public Benefit Corporation Act

Spectrum: Slight Partisan Bill (Democrat 14-5)

Status: (Introduced) 2017-06-26 - Failed 2nd Reading [H616 Detail]

Download: North_Carolina-2017-H616-Amended.html

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2017

H                                                                                                                                                    2

HOUSE BILL 616

Committee Substitute Favorable 4/19/17

 

Short Title:      North Carolina Public Benefit Corporation Act.

(Public)

Sponsors:

 

Referred to:

 

April 10, 2017

A BILL TO BE ENTITLED

AN ACT to enact the north carolina public benefit corporation act.

The General Assembly of North Carolina enacts:

SECTION 1.  Chapter 55 of the General Statutes is amended by adding a new Article to read:

"Article 18.

"The North Carolina Public Benefit Corporation Act.

"§ 55‑18‑01.  Short title.

This Article may be cited as "The North Carolina Public Benefit Corporation Act."

"§ 55‑18‑02.  Application and effect of Article.

(a)        Applicability. This Article applies to all public benefit corporations.

(b)        Applicability of Chapter. The provisions of the other Articles of this Chapter apply to public benefit corporations. If any provision of this Article conflicts with any provision of the other Articles of this Chapter, the provision of this Article shall control.

(c)        Effect of Article on Other Corporations. Other than as provided in G.S. 55‑18‑05, corporations that are not public benefit corporations shall not be subject to this Article, and this Article shall not otherwise affect any law that is applicable to a corporation that is not a public benefit corporation.

(d)       Effect of Articles of Incorporation and Bylaws. A provision of the articles of incorporation or bylaws of a public benefit corporation may not be inconsistent with or supersede a provision of this Article, except to the extent expressly permitted in this Article.

(e)        Not Tax Exempt. Nothing in this Article shall be construed as conferring tax‑exempt status under applicable law on a public benefit corporation formed under the provisions of this Article.

"§ 55‑18‑03.  Definitions.

The following definitions apply in this Article:

(1)        Public benefit corporation. A corporation for profit that is incorporated under and subject to the requirements of this Chapter and that is intended to produce one or more public benefits and to operate in a responsible manner by managing in a manner that balances the stockholders' pecuniary interests, the best interests of those materially affected by the corporation's conduct, and the one or more specific public benefits identified in its articles of incorporation.

(2)        Public benefit. A positive effect or reduction of a negative effect on one or more categories of persons, entities, communities, or interests. This term includes effects of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific, or technological nature. This term does not include effects on shareholders in their capacities as shareholders.

"§ 55‑18‑04.  Articles of incorporation; name.

(a)        Articles of Incorporation. In addition to the required information set forth in G.S. 55‑2‑02, a public benefit corporation shall include both of the following in its articles of incorporation:

(1)        A statement that the corporation is a public benefit corporation.

(2)        An identification of one or more specific public benefits to be promoted by the corporation.

(b)        Name. The name of a public benefit corporation may satisfy the requirements of G.S. 55D‑20 by including the words "public benefit corporation," or the abbreviation "P.B.C.," or the designation "PBC." If the name does not contain this language, the corporation shall, prior to issuing unissued shares or reissuing shares acquired by the corporation, provide notice to any person acquiring a share that it is a public benefit corporation, unless either of the following conditions exists:

(1)        The issuance or reissuance is pursuant to an offering registered under the Securities Act of 1933, as amended.

(2)        At the time of the issuance or reissuance, the corporation has a class of shares that is registered under the Exchange Act, as defined in G.S. 55‑9‑01(b).

"§ 55‑18‑05.  Transition to public benefit corporation status.

(a)        Amendment. An existing corporation may become a public benefit corporation by amending its articles of incorporation to include the information set forth in G.S. 55‑18‑04(a). Notwithstanding any provision of Article 10 of this Chapter to the contrary, an existing corporation may amend its articles of incorporation pursuant to this subsection only upon unanimous approval of the outstanding shares of the corporation entitled to vote thereon.

(b)        Merger or Share Exchange. Notwithstanding any provision of Article 11 of this Chapter to the contrary, if a corporation that is not a public benefit corporation is a party to a merger or share exchange, and the surviving or acquiring corporation in the merger or share exchange is, or is to be as a result of the transaction, a public benefit corporation, the plan of merger or share exchange must be approved unanimously by the outstanding shares of the corporation entitled to vote thereon.

"§ 55‑18‑06.  Termination of public benefit corporation status.

(a)        Amendment. A public benefit corporation may terminate its status and cease to be subject to this Article by amending its articles of incorporation to delete the information set forth in G.S. 55‑18‑04(a). Notwithstanding any provision of Article 10 of this Chapter to the contrary, a public benefit corporation may amend its articles of incorporation pursuant to this subsection only upon two‑thirds approval of the outstanding shares of the corporation entitled to vote thereon.

(b)        Merger or Share Exchange. Notwithstanding any provision of Article 11 of this Chapter to the contrary, if a plan of merger or share exchange would have the effect of terminating the status of a corporation as a public benefit corporation, the plan must be approved by two‑thirds of the outstanding shares of the corporation entitled to vote thereon.

"§ 55‑18‑07.  Notice requirements.

Any stock certificates issued by a public benefit corporation shall note conspicuously that the corporation is a public benefit corporation formed pursuant to this Article. Any notice sent by a public benefit corporation pursuant to G.S. 55‑1‑41 shall state conspicuously that the corporation is a public benefit corporation formed pursuant to this Article.

"§ 55‑18‑08.  Duties of directors.

(a)        General Duty. The board of directors shall manage or direct the business and affairs of the public benefit corporation in a manner that balances the pecuniary interests of the shareholders, the best interests of those materially affected by the corporation's conduct, and the one or more specific public benefits identified in its articles of incorporation.

(b)        Duty to Individuals. A director of a public benefit corporation shall not, by virtue of the one or more specific public benefits identified in the public benefit corporation's articles of incorporation or the provisions of subsection (a) of this section, have any duty to any person on account of any interest of the person in the one or more specific public benefits identified in the articles of incorporation or on account of any interest materially affected by the corporation's conduct. With respect to a decision implicating the balance requirement in subsection (a) of this section, a director's fiduciary duties to shareholders and the corporation shall be deemed to be satisfied if the director's decision is (i) informed and disinterested and (ii) would be approved by a person of ordinary, sound judgment.

(c)        Option. The articles of incorporation of a public benefit corporation may include a provision that any disinterested failure to satisfy this section shall not, for the purposes of G.S. 55‑2‑02(b)(3) or Part 5 of Article 8 of this Chapter, constitute an act or omission not in good faith or a breach of the duty of loyalty.

"§ 55‑18‑09.  Periodic statements and third‑party certification.

(a)        Shareholder Meeting Notice. A public benefit corporation shall include in every notice of a shareholder meeting a statement that it is a public benefit corporation formed under the provisions of this Article.

(b)        Biennial Statement. A public benefit corporation shall no less than biennially provide its shareholders with a statement as to the corporation's promotion of the one or more specific public benefits identified in its articles of incorporation and of the best interests of those persons materially affected by the corporation's conduct. The statement shall include all of the following:

(1)        The objectives established by the board of directors to promote the one or more specific public benefits and the interests of those persons materially affected by the corporation's conduct.

(2)        The standards the board of directors has adopted to measure the corporation's progress in promoting the one or more specific public benefits and the interests of those persons materially affected by the corporation's conduct.

(3)        Objective factual information based on the standards adopted under subdivision (2) of this subsection regarding the corporation's success in meeting the objectives established under subdivision (1) of this subsection.

(4)        An assessment of the corporation's success in meeting the objectives established under subdivision (1) of this subsection.

(c)        Options. The articles of incorporation or bylaws of a public benefit corporation may require the corporation to do any or all of the following:

(1)        Provide the statement required under subsection (b) of this section more frequently than biennially.

(2)        Make the statement required under subsection (b) of this section available to the public.

(3)        Use either or both a third‑party standard or third‑party certification in making the assessment required under subdivision (4) of subsection (b) of this section.

"§ 55‑18‑10.  Derivative suits.

Shareholders of a public benefit corporation may bring a derivative proceeding in accordance with Part 4 of Article 7 of this Chapter if, at the time the proceeding is brought, either of the following requirements is met:

(1)        For a public benefit corporation with shares on a national securities exchange, the shareholders bringing the proceeding own, individually or collectively, the lesser of (i) at least two percent (2%) of the corporation's outstanding shares or (ii) shares with a market value of at least two million dollars ($2,000,000).

(2)        For all other public benefit corporations, the shareholders bringing the proceeding own, individually or collectively, at least two percent (2%) of the corporation's outstanding shares."

SECTION 2.  G.S. 55‑13‑02(a) is amended by adding a new subdivision to read:

"(9)      Consummation of a transition to public benefit corporation status in accordance with G.S. 55‑18‑05, unless any of the following conditions applies:

a.         The shareholder voted in favor of, or consented in writing pursuant to G.S. 55‑7‑04 to, the transition to public benefit corporation status.

b.         Any class or series of shares at the record date fixed to determine the shareholders entitled to receive notice of the meeting to act upon the transition to public benefit corporation status were either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 shareholders."

SECTION 3.  This act becomes effective October 1, 2017.

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