DeSaulnier Social Purpose Corporations bill headed to Governor

A measure by Senator Mark DeSaulnier (D-Concord) to encourage the formation of Social Purpose Corporations is headed to Governor Brown. This bill strengthens previous efforts by Senator DeSaulnier to encourage companies to incorporate with a special purpose.

It is important that California provide options to socially conscious entrepreneurs,” Senator DeSaulnier said. “This bill will help encourage the formation of businesses driven to do more than just maximize profits for their shareholders. SB 1301 ensures that California remains on the forefront of promoting socially conscious business practices.”

Senator DeSaulnier carried legislation (SB 201) in 2011 to establish a new corporate form—a Flexible Purpose Corporation. This new corporate form integrated the for-profit philosophy of the traditional corporation along with a “special purpose” mission to encourage and expressly permit companies to pursue one or more charitable or public purpose activities in addition to creating economic value for shareholders. Washington and Delaware followed California’s lead in creating similar corporate forms.

SB 1301 renames Flexible Purpose Corporations as Social Purpose Corporations, to more accurately reflect the spirit of the law. SB 1301 seeks to strengthen and clean up the corporate code created under SB 201, by clarifying that directors of Social Purpose Corporations are required—and not just encouraged—to consider a special purpose. This bill also cleans up California code to better conform to other states’ guidelines and new corporate laws that have proven successful in encouraging companies to incorporate with a special mission.

According to the Secretary of State, a total of 62 Flexible Purpose Corporations have been formed since January 1, 2012.

To learn more or contact Senator Mark DeSaulnier visit

DeSaulnier (D-Concord) represents the Seventh Senate District, which includes most of Contra Costa County and parts of Alameda County.

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