Brown Signs Bill for Benefit Corporations
California companies now have a new way of doing business, thanks to the Governor’s signature yesterday on Assembly Bill 361, introduced by Assemblymember Jared Huffman (D-San Rafael).
Huffman’s law, which received overwhelming bipartisan support as it worked through both chambers of the California Legislature, creates a new, fully voluntary class of corporation in California called “benefit corporations,” which allows businesses to pursue a material positive impact on the environment and community in addition to maximizing profits. Current law requires corporations to prioritize financial interests and shareholder profits.
“California must be a leader in attracting socially-responsible companies, investors and consumers,” said Assemblymember Huffman. “Thanks to the Governor’s action, we now have a new law that sends a strong message to entrepreneurs that California is open for this emerging form of business.”
Under AB 361, businesses can choose to incorporate as benefit corporations and enjoy these significant advantages:
· Greater access to social impact and venture capital investments;
· Legal protection for directors and officers in their more broadly defined fiduciary roles of maximizing profits as well as ensuring social and environmental considerations; and
· Marketing opportunities that will allow consumers to distinguish, in a very real and ascertainable fashion, between a business that claims to be socially responsible, and one that is responsible.
“Benefit corporations are companies that understand the power of money to help achieve positive changes,” said Jeff Kletter, CEO & Co-founder of KINeSYS Inc., based in San Rafael. “We are happy to be affiliated with a community that knows we need to all work together to help take our country and the economy to the next level.”
“We have to keep California competitive and moving forward in a positive direction in order to ensure the success of our young people,” said Jason Greenwald, a math teacher from Petaluma and supporter of this bill.
“Benefit corporations value profits, people and our planet equally,” said Stuart Rudick, Partner of Mindful Investors LLC, based in Mill Valley. “AB 361 provides a sustainable model for California business to achieve economic success while also creating social good.”
AB 361 was proposed by several of Assemblymember Huffman’s constituents who participated in his annual “There Oughta Be a Law…or Not” contest. The bill is supported by over 200 California-based businesses and associations. California now joins Hawaii, Maryland, New Jersey, New York, Vermont and Virginia where benefit corporation legislation already has passed with bipartisan support.
