S T A T E O F N E W Y O R K
________________________________________________________________________
S. 6088 A. 8907
S E N A T E - A S S E M B L Y
(PREFILED)
January 4, 2012
___________
IN SENATE -- Introduced by Sens. SQUADRON, LARKIN -- read twice and
ordered printed, and when printed to be committed to the Committee on
Judiciary
IN ASSEMBLY -- Introduced by M. of A. SILVER -- read once and referred
to the Committee on Corporations, Authorities and Commissions
AN ACT to amend the general construction law and the business corpo-
ration law, in relation to benefit corporations
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Subdivision 4-a of section 66 of the general construction
2 law, as added by chapter 599 of the laws of 2011, is amended to read as
3 follows:
4 4-a. A "benefit corporation" means a business corporation incorporated
5 under article [seventeen] FOUR of the business corporation law [and
6 whose status as a benefit corporation has not been terminated as
7 provided in article seventeen of the business corporation law] THAT WAS
8 FORMED AS A BENEFIT CORPORATION OR HAS ELECTED TO BECOME A BENEFIT
9 CORPORATION AS PROVIDED IN ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION
10 LAW UNTIL SUCH TIME AS IT HAS CEASED TO BE A BENEFIT CORPORATION AS
11 PROVIDED IN ARTICLE SEVENTEEN OF THE BUSINESS CORPORATION LAW.
12 S 2. Paragraphs (a) and (d) of section 1702 of the business corpo-
13 ration law, as added by chapter 599 of the laws of 2011, are amended to
14 read as follows:
15 (a) "Benefit corporation" means a business corporation incorporated
16 under [this article and whose status as a benefit corporation has not
17 been terminated as provided in this article] ARTICLE FOUR OF THIS CHAP-
18 TER THAT WAS FORMED AS A BENEFIT CORPORATION OR HAS ELECTED TO BECOME A
19 BENEFIT CORPORATION AS PROVIDED IN THIS ARTICLE UNTIL SUCH TIME AS IT
20 HAS CEASED TO BE A BENEFIT CORPORATION AS PROVIDED IN THIS ARTICLE.
21 (d) "Minimum status vote" means that, in addition to any other
22 approval or vote required by this chapter, the certificate of incorpo-
23 ration or a bylaw adopted by the shareholders, THE HIGHER OF:
24 (1) [The holders of shares of every class or series that are entitled
25 to vote on the corporate action shall be entitled to vote as a class on
26 the corporate action; and
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD13863-01-1
S. 6088 2 A. 8907
1 (2) The corporate action must be approved by vote of the shareholders
2 of each class or series entitled to cast at least three-quarters of the
3 votes that all shareholders of the class or series are entitled to cast
4 thereon] THE VOTE REQUIRED BY THE CERTIFICATE OF INCORPORATION; OR
5 (2) TWO-THIRDS OF THE VOTES ENTITLED TO BE CAST BY THE OUTSTANDING
6 SHARES OF THE CORPORATION, PROVIDED THAT IF ANY CLASS OF SHARES IS ENTI-
7 TLED TO VOTE AS A GROUP, APPROVAL SHALL ALSO REQUIRE THE AFFIRMATIVE
8 VOTE OF THE HOLDERS OF AT LEAST TWO-THIRDS OF THE VOTES ENTITLED TO BE
9 CAST BY THE OUTSTANDING SHARES OF EACH VOTING GROUP.
10 S 3. Section 1703 of the business corporation law, as added by chapter
11 599 of the laws of 2011, is amended to read as follows:
12 S 1703. Formation of benefit corporations.
13 A benefit corporation shall be [formed in accordance with this chapter
14 except that] INCORPORATED UNDER ARTICLE FOUR OF THIS CHAPTER, IN ACCORD-
15 ANCE WITH THE PROVISIONS OF THIS ARTICLE, AND its certificate of incor-
16 poration shall also state that it is a benefit corporation.
17 S 4. Paragraphs (a) and (b) of section 1704 of the business corpo-
18 ration law, as added by chapter 599 of the laws of 2011, are amended to
19 read as follows:
20 (a) A business corporation may become a benefit corporation under this
21 article by amending its certificate of incorporation so that it contains
22 a statement that the corporation is a benefit corporation. [The] SUCH
23 amendment shall [not] be [effective unless it is] adopted by at least
24 the minimum status vote.
25 (b) Any corporation that is not a benefit corporation that is a party
26 to a merger or consolidation in which [the surviving or consolidated
27 corporation will be a benefit corporation] SUCH CORPORATION WILL BECOME
28 A BENEFIT CORPORATION must approve the plan of merger or consolidation
29 by at least the minimum status vote in addition to any other vote
30 required by this chapter, the certificate of incorporation or the
31 bylaws.
32 S 5. Paragraphs (a), (b) and (d) of section 1705 of the business
33 corporation law, as added by chapter 599 of the laws of 2011, are
34 amended to read as follows:
35 (a) A benefit corporation may terminate its status as such and cease
36 to be subject to this article by amending its certificate of incorpo-
37 ration to delete the statement that the corporation is a benefit corpo-
38 ration. [The] SUCH amendment shall [not] be [effective unless it is]
39 adopted by at least the minimum status vote.
40 (b) [If a] ANY benefit corporation THAT is a party to a merger or
41 consolidation in which [the surviving or new corporation will not be]
42 SUCH CORPORATION WILL NO LONGER BE a benefit corporation[,] AS A RESULT
43 OF THE TRANSACTION, MUST APPROVE the plan of merger or consolidation
44 [shall not be effective unless it is adopted] by at least the minimum
45 status vote in addition to any other vote required by this chapter, the
46 certificate of incorporation or the bylaws.
47 (d) A sale, lease, conveyance, exchange, transfer, or other disposi-
48 tion of all or substantially all of the assets of a benefit corporation,
49 [unless the transaction is in the usual and regular course of business
50 of the benefit corporation,] shall [not] be [effective unless the trans-
51 action is] approved by at least the minimum status vote in addition to
52 any other vote required by this chapter, the certificate of incorpo-
53 ration or the bylaws.
54 S 6. This act shall take effect on the same date and in the same
55 manner as section 5 of chapter 599 of the laws of 2011, takes effect.