Bill Text: TX SB849 | 2013-2014 | 83rd Legislature | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relating to social purposes of a for-profit corporation and the consideration of social purposes and other interests by officers and directors of a for-profit corporation.

Spectrum: Bipartisan Bill

Status: (Passed) 2013-05-18 - Effective on 9/1/13 [SB849 Detail]

Download: Texas-2013-SB849-Engrossed.html

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By: Carona S.B. No. 849

A BILL TO BE ENTITLED
AN ACT
relating to social purposes of a for-profit corporation and the
consideration of social purposes and other interests by officers
and directors of a for-profit corporation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1.002, Business Organizations Code, is
amended by adding Subdivision (82-a) to read as follows:
(82-a) "Social purposes" means one or more purposes of
a for-profit corporation that are specified in the corporation's
certificate of formation and consist of promoting one or more
positive impacts on society or the environment or of minimizing one
or more adverse impacts of the corporation's activities on society
or the environment. Those impacts may include:
(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 the environment;
(D) improving human health;
(E) promoting the arts, sciences, or advancement
of knowledge;
(F) increasing the flow of capital to entities
with a social purpose; and
(G) conferring any particular benefit on society
or the environment.
SECTION 2. Section 3.007, Business Organizations Code, is
amended by adding Subsection (d) to read as follows:
(d) Notwithstanding Section 2.008, a for-profit corporation
may include one or more social purposes in addition to the purpose
or purposes required to be stated in the corporation's certificate
of formation by Section 3.005(a)(3). The corporation may also
include in the certificate of formation a provision that the board
of directors and officers of the corporation shall consider any
social purpose specified in the certificate of formation in
discharging the duties of directors or officers under this code or
otherwise.
SECTION 3. Subsection (a), Section 21.101, Business
Organizations Code, is amended to read as follows:
(a) The shareholders of a corporation may enter into an
agreement that:
(1) restricts the discretion or powers of the board of
directors;
(2) eliminates the board of directors and authorizes
the business and affairs of the corporation to be managed, wholly or
partly, by one or more of its shareholders or other persons;
(3) establishes the individuals who shall serve as
directors or officers of the corporation;
(4) determines the term of office, manner of selection
or removal, or terms or conditions of employment of a director,
officer, or other employee of the corporation, regardless of the
length of employment;
(5) governs the authorization or making of
distributions whether in proportion to ownership of shares, subject
to Section 21.303;
(6) determines the manner in which profits and losses
will be apportioned;
(7) governs, in general or with regard to specific
matters, the exercise or division of voting power by and between the
shareholders, directors, or other persons, including use of
disproportionate voting rights or director proxies;
(8) establishes the terms of an agreement for the
transfer or use of property or for the provision of services between
the corporation and another person, including a shareholder,
director, officer, or employee of the corporation;
(9) authorizes arbitration or grants authority to a
shareholder or other person to resolve any issue about which there
is a deadlock among the directors, shareholders, or other persons
authorized to manage the corporation;
(10) requires winding up and termination of the
corporation at the request of one or more shareholders or on the
occurrence of a specified event or contingency, in which case the
winding up and termination of the corporation will proceed as if all
of the shareholders had consented in writing to the winding up and
termination as provided by Subchapter K; [or]
(11) with regard to one or more social purposes
specified in the corporation's certificate of formation, governs
the exercise of corporate powers, the management of the operations
and affairs of the corporation, the approval by shareholders or
other persons of corporate actions, or the relationship among the
shareholders, the directors, and the corporation; or
(12) otherwise governs the exercise of corporate
powers, the management of the business and affairs of the
corporation, or the relationship among the shareholders, the
directors, and the corporation as if the corporation were a
partnership or in a manner that would otherwise be appropriate only
among partners and not contrary to public policy.
SECTION 4. Section 21.401, Business Organizations Code, is
amended by amending Subsection (b) and adding Subsections (c), (d),
and (e) to read as follows:
(b) In discharging the duties of director under this code or
otherwise and in considering the best interests of the corporation,
a director is entitled to [may] consider the long-term and
short-term interests of the corporation and the shareholders of the
corporation, including the possibility that those interests may be
best served by the continued independence of the corporation.
(c) In discharging the duties of a director under this code
or otherwise, a director is entitled to consider any social
purposes specified in the corporation's certificate of formation.
(d) Subject to direction by the board of directors of the
corporation, in discharging the duties of an officer under this
code or otherwise, an officer is entitled to consider:
(1) the long-term and short-term interests of the
corporation and of the corporation's shareholders, including the
possibility that those interests may be best served by the
continued independence of the corporation; and
(2) any social purposes specified in the corporation's
certificate of formation.
(e) Nothing in this section prohibits or limits a director
or officer of a corporation that does not have a social purpose
specified as a purpose in the corporation's certificate of
formation from considering, approving, or taking an action that
promotes or has the effect of promoting a social, charitable, or
environmental purpose.
SECTION 5. This Act takes effect September 1, 2013.