Bill Text: OR HB2296 | 2013 | Regular Session | Enrolled

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Bill Title: Relating to benefit companies.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Passed) 2013-06-04 - Chapter 269, (2013 Laws): Effective date January 1, 2014. [HB2296 Detail]

Download: Oregon-2013-HB2296-Enrolled.html

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     77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session

                            Enrolled

                         House Bill 2296

Sponsored by Representatives READ, BAILEY; Representative FAGAN,
  Senator EDWARDS (Presession filed.)

                     CHAPTER ................

                             AN ACT

Relating to benefit companies.
  Whereas the Legislative Assembly intends with this 2013 Act to
provide the legal means to create and operate benefit companies,
a form of business entity the purpose of which is to create
benefits for the public in addition to generating profit for the
entity's owners; and
  Whereas the Legislative Assembly understands and intends that
the provisions of this 2013 Act do not give a benefit company a
preference for public contracts, provide a benefit company with
any tax advantage or otherwise permit the State of Oregon, an
agency of the State of Oregon, a local government or an agency of
a local government to grant a preference or advantage to a
benefit company that is not available on the same basis to any
other person or entity, or that is solely a consequence of the
benefit company's status as a benefit company; now, therefore,

Be It Enacted by the People of the State of Oregon:

  SECTION 1.  { + As used in sections 1 to 11 of this 2013 Act:
  (1) 'Benefit company' means a corporation or a limited
liability company that is incorporated, organized, formed or
created under section 3 of this 2013 Act.
  (2) 'Benefit governor' means an individual who is designated as
the benefit governor of a benefit company under section 7 of this
2013 Act.
  (3) 'General public benefit' means a material positive impact
on society and the environment, taken as a whole, from the
business and operations of a benefit company.
  (4) 'Governor' means a director of a corporation that is a
benefit company, a member in a member-managed limited liability
company that is a benefit company or a manager in a
manager-managed limited liability company that is a benefit
company.
  (5) 'Minimum status vote' means a decision that an entity makes
in accordance with section 4 of this 2013 Act.
  (6) 'Third-party standard' means a recognized standard for
defining, reporting and assessing an entity's social and
environmental performance that:
  (a) Establishes criteria that apply to all of the interests
described in section 6 (1)(b), (c), (d), (e) and (f) of this 2013
Act;

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  (b) Is developed by an organization that is not under the
control of the benefit company or any of the benefit company's
affiliates; and
  (c) Has information publicly available concerning:
  (A) The criteria the standard uses to measure an entity's
overall social and environmental performance and the relative
weight the standard gives to each criterion;
  (B) The process by which the standard is developed and revised;
and
  (C) The organization that developed the standard that is
sufficient in detail to disclose any relationships that might
compromise the organization's independence, including:
  (i) The material owners and members of the organization's
governing body;
  (ii) How the organization selects members of the organization's
governing body; and
  (iii) The organization's sources of financial support. + }
  SECTION 2.  { + (1) Except as otherwise provided in sections 1
to 11 of this 2013 Act, sections 1 to 11 of this 2013 Act apply
to:
  (a) A corporation that states in the corporation's articles of
incorporation or articles of conversion that the corporation is
subject to sections 1 to 11 of this 2013 Act;
  (b) A limited liability company that states in the limited
liability company's articles of organization or articles of
conversion that the limited liability company is subject to
sections 1 to 11 of this 2013 Act; or
  (c) A corporation or limited liability company that elects to
become a benefit company under section 3 of this 2013 Act.
  (2)(a) Except as provided in paragraph (c) of this subsection,
a benefit company that is a corporation incorporated under ORS
chapter 60 is subject to ORS chapter 60 and to sections 1 to 11
of this 2013 Act.
  (b) Except as provided in paragraph (c) of this subsection, a
benefit company that is a limited liability company organized
under ORS chapter 63 is subject to ORS chapter 63 and to sections
1 to 11 of this 2013 Act.
  (c) To the extent that a provision of sections 1 to 11 of this
2013 Act conflicts with a provision of ORS chapter 60 or 63, a
specific provision of sections 1 to 11 of this 2013 Act controls
over a general provision of ORS chapter 60 or 63.
  (3) Sections 1 to 11 of this 2013 Act do not apply to a
corporation that is not a benefit company or to a limited
liability company that is not a benefit company. + }
  SECTION 3.  { + (1)(a) Notwithstanding ORS 60.074 (2), a
corporation incorporated under ORS chapter 60 is a benefit
company under sections 1 to 11 of this 2013 Act if the
corporation's articles of incorporation state that the
corporation is a benefit company subject to sections 1 to 11 of
this 2013 Act.
  (b) Notwithstanding ORS 63.074 (3), a limited liability company
organized under ORS chapter 63 is a benefit company under
sections 1 to 11 of this 2013 Act if the limited liability
company's articles of organization state that the limited
liability company is a benefit company subject to sections 1 to
11 of this 2013 Act.
  (2)(a) A corporation that is incorporated under ORS chapter 60
may become a benefit company by amending the corporation's
articles of incorporation to state, in addition to the
requirements set forth in ORS 60.047, that the corporation is a

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benefit company subject to sections 1 to 11 of this 2013 Act. The
amendment to the articles of incorporation must be approved by a
minimum status vote.
  (b) A limited liability company that is organized under ORS
chapter 63 may become a benefit company by amending the limited
liability company's articles of organization to state, in
addition to the requirements set forth in ORS 63.047, that the
limited liability company is a benefit company subject to
sections 1 to 11 of this 2013 Act. The amendment to the articles
of organization must be approved by a minimum status vote.
  (3) A benefit company may be formed by means of a conversion if
articles of conversion that state that the converted entity will
be a benefit company that is subject to sections 1 to 11 of this
2013 Act are approved by a minimum status vote.
  (4) An entity that is not a benefit company may become a
benefit company by merging or exchanging equity interests with a
benefit company if the shareholders or holders of equity
interests of the entity that is not the benefit company approve,
by a minimum status vote, a plan of merger or a plan for
exchanging equity interests with a benefit company under which
the surviving entity will be a benefit company.
  (5) A benefit company may become an entity other than a benefit
company only if an action to remove from the articles of
incorporation, articles of organization or articles of conversion
the provision that states that the entity is a benefit company
subject to sections 1 to 11 of this 2013 Act is approved by a
minimum status vote.
  (6)(a) A plan for a benefit company must be approved by a
minimum status vote if the plan would:
  (A) Merge the benefit company with an entity that is not a
benefit company, if the surviving entity would not be a benefit
company;
  (B) Provide for exchanging equity interests with an entity that
is not a benefit company, if the exchange would create an entity
that is not a benefit company and that would hold substantially
all of the benefit company's assets;
  (C) Convert the benefit company to an entity that is not a
benefit company; or
  (D) Otherwise cause sections 1 to 11 of this 2013 Act not to
apply to the benefit company.
  (b) A sale, lease, exchange or other disposition of all or
substantially all of a benefit company's assets must be approved
by a minimum status vote unless the benefit company conducts the
sale, lease, exchange or other disposition in the ordinary course
of the benefit company's business.
  (7) A provision of a benefit company's articles of
incorporation, articles of organization, articles of conversion
or plan described in subsection (6) of this section may be
inconsistent with or supersede a provision of sections 1 to 11 of
this 2013 Act only to the extent that the provision in the
articles of incorporation, articles of organization, articles of
conversion or plan imposes a more stringent requirement on the
benefit company, in keeping with the purposes set forth in
sections 1 to 11 of this 2013 Act, than a provision of sections 1
to 11 of this 2013 Act imposes. + }
  SECTION 4.  { + (1) Except as provided in subsections (2) and
(3) of this section, an approval of an action described in
section 3 (2) to (6) of this 2013 Act is effective only if, in
addition to any other applicable requirements, a majority of the

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interests that are entitled to vote on the action are voted to
approve the action.
  (2) If an entity's governing documents or the provisions of ORS
chapter 60 or 63, as applicable, require more than a majority
vote or require each class or series to vote separately, approval
of the action is effective only if the requirement for the
greater vote or for separate class or series voting is met.
  (3) If, as of the effective date of this 2013 Act, an entity
has shares that are listed on a national securities exchange or
are regularly traded in a market that a member of a national or
affiliated securities association maintains, each class or series
of the entity's shares must separately meet the requirement to
approve the action by two-thirds of the shares that are entitled
to vote. + }
  SECTION 5.  { + (1) In addition to any purpose set forth in or
adopted in accordance with ORS 60.047 (2)(c)(A), 60.074, 63.047
or 63.074, a benefit company has the purpose of providing a
general public benefit.
  (2)(a) The articles of incorporation or articles of
organization for a benefit company may identify a specific public
benefit for the benefit company in addition to the purposes
described in subsection (1) of this section. A benefit company's
identification of a specific public benefit does not limit the
benefit company's obligation to fulfill the purposes described in
subsection (1) of this section.
  (b) A benefit company may amend the articles of incorporation
or articles of organization to add, amend or remove a specific
public benefit in the manner otherwise provided for amending the
benefit company's purpose in the articles of incorporation or
articles of organization.
  (3) Notwithstanding the requirement in ORS 58.076 that a
professional corporation have rendering professional service as
the professional corporation's sole purpose, a professional
corporation that is a benefit company shall have the purposes set
forth in ORS 58.076 and the purpose of providing a general public
benefit. The professional corporation may identify a specific
public benefit in addition to the purposes described in this
subsection. + }
  SECTION 6.  { + (1) A governor of a benefit company shall act
in the best interests of the benefit company and shall discharge
the governor's duties as provided for a director of a corporation
in ORS 60.357, or as provided for a member or manager of a
limited liability company under ORS 63.155, as appropriate for
the benefit company's form of organization. In determining the
best interests of the benefit company, the governor shall
consider how an action of the governor or of the benefit company,
or a decision not to act, will affect:
  (a) The shareholders or members of the benefit company;
  (b) The employees and work force of the benefit company and the
employees and work force of the benefit company's subsidiaries
and suppliers;
  (c) The benefit company's subsidiaries and suppliers;
  (d) The interests the benefit company's customers have in
receiving a portion of the general public benefit or specific
public benefit that the benefit company provides;
  (e) The communities that the benefit company's activities
affect including, but not limited to, the communities in which
the benefit company is located, operates or has offices or other
facilities and in which the benefit company's subsidiaries and

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suppliers are located, operate or have offices or other
facilities;
  (f) The local and global environment;
  (g) The short-term and long-term interests of the benefit
company, including an interest in benefits that might accrue from
the benefit company's long-term plans and the possibility that
the interests of the benefit company are best served by keeping
the benefit company independent; and
  (h) The benefit company's ability to fulfill the benefit
company's general public benefit purpose and any specific public
benefit identified in the benefit company's articles of
incorporation or articles of organization.
  (2) A governor of a benefit company may consider how an action
of the governor or of the benefit company, or decision not to
act, will affect other interests the governor deems pertinent.
  (3) A governor of a benefit company need not give a particular
interest identified in subsection (1) or (2) of this section
priority over another interest identified in subsection (1) or
(2) of this section unless the benefit company's articles of
incorporation or articles of organization identify an interest to
which the governor must give priority.
  (4) A governor's consideration under this section of the
effects of an action, or a decision not to act, is in accordance
with ORS 60.357 or 63.155 as ORS 60.357 or 63.155 applies to the
governor.
  (5)(a) A governor of a benefit company is not personally liable
for money damages as a consequence of taking an action or
deciding not to act if the governor discharged the governor's
duties in accordance with this section and with ORS 60.357 or
63.155, as appropriate for the benefit company's form of
organization.
  (b) A governor of a benefit company is not personally liable
for money damages for the benefit company's failure to provide a
general public benefit or a specific public benefit.
  (c) A governor of a benefit company does not have a duty to a
person as a consequence of the person's status as a beneficiary
of the general public benefit or a specific public benefit that
the benefit company provides. + }
  SECTION 7.  { + (1)(a) A benefit company must have a board of
governors and may designate at least one member of the board as a
benefit governor. A benefit governor, in addition to the powers,
duties, rights, privileges and immunities that other governors of
the benefit company have, has the powers, duties, rights,
privileges and immunities set forth in this section.
  (b) The articles of incorporation, articles of organization,
bylaws or other organizational documents of the benefit company
may set forth additional qualifications for a benefit governor
that are consistent with this section.
  (2) The benefit company's governors shall elect or appoint and
may remove a benefit governor in accordance with procedures set
forth in the benefit company's articles of incorporation or
articles of organization or in accordance with procedures the
governors adopt if the articles of incorporation or articles of
organization do not specify a procedure.
  (3) The benefit governor shall provide information or
statements to other governors of the benefit company concerning
the other governors' obligations under section 6 of this 2013
Act.
  (4) An individual's action or decision not to act made in the
capacity of benefit governor is for all purposes the individual's

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action or decision not to act in the individual's capacity as a
governor of the benefit company.
  (5) A benefit governor is not personally liable for an action
or omission the benefit governor makes in the benefit governor's
capacity as a benefit governor unless the action or omission
constitutes self-dealing, willful misconduct or a knowing
violation of law. + }
  SECTION 8.  { + (1) A member that has management duties with
respect to a benefit company, or an officer or a manager of a
benefit company, shall act in the best interests of the benefit
company and shall discharge the member's, officer's or manager's
duties as provided in ORS 60.374 and 60.377 or in ORS 63.155, as
appropriate for the benefit company's form of organization. In
addition, the member, officer or manager shall consider the
effects of an action of the member, officer or manager or of the
benefit company, or of a decision not to act:
  (a) To the extent the member, officer or manager has the
discretion to take the action or to decide not to act;
  (b) If, in the member's, officer's or manager's reasonable
judgment, the action or decision not to act may have a material
effect on the general public benefit or a specific public benefit
the benefit company provides; and
  (c) In accordance with the provisions of section 6 (1) to (3)
of this 2013 Act for a governor's consideration of the effects of
the action or the decision not to act.
  (2) A member's, officer's or manager's consideration under this
section of the effects of an action, or a decision not to act, is
in accordance with ORS 60.374 and 60.377 or with ORS 63.155, as
appropriate for the benefit company's form of organization, as
those provisions apply to a member, officer or manager of a
benefit company.
  (3)(a) A member, officer or manager of a benefit company is not
personally liable for money damages as a consequence of taking an
action or deciding not to act if the member, officer or manager
discharged the member's, officer's or manager's duties in
accordance with this section and with ORS 60.374 and 60.377 or
with ORS 63.155, as appropriate for the benefit company's form of
organization.
  (b) A member, officer or manager of a benefit company is not
personally liable for money damages for the benefit company's
failure to provide a general public benefit or a specific public
benefit.
  (c) A member, officer or manager of a benefit company does not
have a duty to a person as a consequence of the person's status
as a beneficiary of the general public benefit or a specific
public benefit that the benefit company provides. + }
  SECTION 9.  { + (1) Except as provided in subsection (2) of
this section, a person may not commence a proceeding against a
benefit company, or against the governors, members, officers or
managers of a benefit company, to assert a claim that the benefit
company, governors, members, officers or managers:
  (a) Failed to pursue, create or provide a general public
benefit or a specific public benefit identified in the benefit
company's articles of incorporation or articles of organization;
or
  (b) Violated a duty or a standard of conduct prescribed under
sections 1 to 11 of this 2013 Act.
  (2) A person may commence a direct or derivative proceeding, as
appropriate, to compel a benefit company to provide a general
public benefit or a specific public benefit or to require a

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governor, member, officer or manager to act in accordance with a
duty or a standard of conduct set forth in the benefit company's
articles of incorporation or articles of organization, or
prescribed under sections 1 to 11 of this 2013 Act, only if the
person is:
  (a) The benefit company;
  (b) A governor;
  (c) A shareholder or member; or
  (d) Another person identified in the benefit company's bylaws,
articles of incorporation or articles of organization as having a
right to commence a proceeding under this section.
  (3) A benefit company is not liable for money damages as a
consequence of failing to provide a general public benefit or a
specific public benefit. + }
  SECTION 10.  { + (1) A benefit company each year shall prepare
a benefit report.
  (2)(a) The benefit report shall give a narrative description
of:
  (A) The extent to which the benefit company provided a general
public benefit and the actions and methods the benefit company
used to provide the general public benefit.
  (B) The extent to which the benefit company provided a specific
public benefit identified in the benefit company's articles of
incorporation or articles of organization, and the actions and
methods the benefit company used to provide the specific public
benefit.
  (C) Any circumstances that hindered or prevented the benefit
company from providing a general public benefit or a specific
public benefit.
  (b) In addition to the narrative descriptions required under
paragraph (a) of this subsection, the benefit report shall:
  (A) Assess the extent to which the benefit company met or
exceeded a third-party standard that the benefit company selected
and identified in the benefit report. The benefit company shall
conduct the assessment and evaluate the benefit company's
performance with respect to the third-party standard in a manner
that is consistent with assessments and evaluations conducted in
previous benefit reports or shall explain the reasons for an
inconsistent assessment or evaluation.
  (B) Describe the process and rationale the benefit company used
to select or to change the third-party standard described in
subparagraph (A) of this paragraph.
  (c) A benefit report prepared under this section does not need
to be audited or certified by a third party.
  (3) The benefit company each year shall deliver a copy of the
benefit report to each holder of an equity interest within 120
days after the end of the benefit company's fiscal year or at the
same time the benefit company delivers any other annual report to
a holder of an equity interest.
  (4) A benefit company shall post on the publicly accessible
pages of the benefit company's website all of the benefit
company's benefit reports or shall provide without charge a copy
of the most recent benefit report to a person that requests a
copy unless providing the copy would violate a provision of
applicable law. + }
  SECTION 11.  { + The benefit company shall assess the extent to
which the benefit company provides a general public benefit and
any specific public benefit identified in the benefit company's
articles of incorporation or articles of organization against a
third-party standard. + }

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Passed by House April 18, 2013

    .............................................................
                             Ramona J. Line, Chief Clerk of House

    .............................................................
                                     Tina Kotek, Speaker of House

Passed by Senate May 23, 2013

    .............................................................
                              Peter Courtney, President of Senate

Enrolled House Bill 2296 (HB 2296-A)                       Page 8

Received by Governor:

......M.,............., 2013

Approved:

......M.,............., 2013

    .............................................................
                                         John Kitzhaber, Governor

Filed in Office of Secretary of State:

......M.,............., 2013

    .............................................................
                                   Kate Brown, Secretary of State

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