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A BILL TO BE ENTITLED
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AN ACT
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relating to authorizing the formation of public benefit |
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corporations. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 3.007, Business Organizations Code, is |
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amended by amending Subsection (d) and adding Subsection (e) to |
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read as follows: |
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(d) Notwithstanding Section 2.008 and subject to Section |
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21.954, a for-profit corporation may include one or more social |
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purposes in addition to the purpose or purposes required to be |
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stated in the corporation's certificate of formation by Section |
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3.005(a)(3). The corporation may also include in the certificate |
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of formation a provision that the board of directors and officers of |
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the corporation shall consider any social purpose specified in the |
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certificate of formation in discharging the duties of directors or |
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officers under this code or otherwise. |
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(e) Notwithstanding Section 2.008, instead of including in |
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its certificate of formation or amending its certificate of |
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formation to include one or more social purposes as provided by |
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Subsection (d), a for-profit corporation may elect to become a |
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public benefit corporation under Subchapter S, Chapter 21, in the |
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manner provided by this subsection and that subchapter. The |
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certificate of formation of a public benefit corporation must: |
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(1) specify one or more specific public benefits, as |
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defined by Section 21.952, to be promoted by the corporation; and |
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(2) state in its heading that the corporation is a |
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public benefit corporation. |
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SECTION 2. Chapter 21, Business Organizations Code, is |
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amended by adding Subchapter S to read as follows: |
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SUBCHAPTER S. PUBLIC BENEFIT CORPORATIONS |
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Sec. 21.951. LAW APPLICABLE TO PUBLIC BENEFIT CORPORATIONS; |
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FORMATION. (a) A corporation may elect to become a public benefit |
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corporation as provided by Section 3.007(e) that is governed by |
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this subchapter. |
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(b) If a corporation elects to become a public benefit |
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corporation, the corporation is subject to the other provisions of |
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this chapter and other provisions of this code applicable to |
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for-profit corporations. |
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(c) To the extent of a conflict between this subchapter and |
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another provision in this chapter, this subchapter controls. |
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Sec. 21.952. DEFINITIONS. In this subchapter: |
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(1) "Public benefit" means a positive effect, or a |
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reduction of a negative effect, on one or more categories of |
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persons, entities, communities, or interests, other than |
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shareholders in their capacities as shareholders, including |
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effects of an artistic, charitable, cultural, economic, |
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educational, environmental, literary, medical, religious, |
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scientific, or technological nature. |
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(2) "Public benefit corporation" means a for-profit |
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corporation that is formed under Section 3.007(e) and the other |
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applicable provisions of Chapter 3 and is subject to this |
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subchapter. |
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(3) "Public benefit provisions" means the provisions |
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of a certificate of formation contained in the document as |
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specified by Section 3.007(e) and this subchapter. |
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Sec. 21.953. PURPOSE OF PUBLIC BENEFIT CORPORATION; NAME OF |
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CORPORATION. (a) A public benefit corporation is a domestic |
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for-profit corporation that is intended to produce a public benefit |
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or benefits and to operate in a responsible and sustainable manner. |
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(b) To accomplish the purpose of the corporation described |
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by Subsection (a), a public benefit corporation shall be managed in |
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a manner that balances: |
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(1) the shareholders' pecuniary interests; |
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(2) the best interests of those persons materially |
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affected by the corporation's conduct; and |
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(3) the public benefit or benefits specified in the |
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corporation's certificate of formation. |
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(c) The name of the public benefit corporation must contain |
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the words "public benefit corporation," the abbreviation "P.B.C.," |
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or the designation "PBC," which is considered to satisfy the |
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applicable requirements of Chapter 5. |
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Sec. 21.954. CERTAIN AMENDMENTS AND MERGERS; VOTER APPROVAL |
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REQUIRED. (a) Notwithstanding any other provision of this |
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chapter, a corporation that is not a public benefit corporation may |
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not, without the approval of 90 percent of the owners of outstanding |
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shares of each class of shares of the corporation of which there are |
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outstanding shares, whether voting or nonvoting: |
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(1) amend the corporation's certificate of formation |
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to include a specific public benefit; or |
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(2) merge or consolidate with or into another entity |
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if, as a result of the merger or consolidation, the shares in the |
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corporation would become, or be converted into or exchanged for the |
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right to receive, shares or other equity interests in a domestic or |
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foreign public benefit corporation or similar entity. |
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(b) This section does not apply: |
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(1) until the corporation has received payment for any |
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of the corporation's capital stock; or |
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(2) with respect to a nonstock corporation, until the |
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corporation has members. |
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(c) Any shareholder of a corporation that is not a public |
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benefit corporation is entitled to an appraisal of the fair value of |
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the shareholder's shares of stock by a court, if the shareholder: |
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(1) holds shares of the corporation immediately before |
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the effective date of: |
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(A) an amendment to the corporation's |
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certificate of formation to include a specific public benefit |
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authorized by Section 3.007(e); or |
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(B) a merger or consolidation that would result |
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in the conversion of the corporation's shares into or exchange of |
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the corporation's shares for the right to receive shares or other |
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equity interests in a domestic or foreign public benefit |
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corporation or similar entity; and |
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(2) has not: |
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(A) voted in favor of an amendment, merger, or |
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consolidation described by Subdivision (1); or |
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(B) given written consent to the action under the |
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applicable provisions of this code. |
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(d) Notwithstanding any other provision of this chapter, a |
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corporation that is a public benefit corporation may not, without |
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the approval of two-thirds of the owners of outstanding shares of |
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each class of the stock of the corporation of which there are |
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outstanding shares, whether voting or nonvoting: |
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(1) amend the corporation's certificate of formation |
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to delete or amend a provision described by Section 3.007(e)(1) or |
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21.957(c); or |
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(2) merge or consolidate with or into another entity |
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if, as a result of the merger or consolidation, the shares in the |
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corporation would become, or be converted into or exchanged for the |
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right to receive, shares or other equity interests in a domestic or |
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foreign corporation: |
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(A) that is not a public benefit corporation or |
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similar entity; and |
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(B) the certificate of formation, or similar |
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governing document of which does not contain identical provisions |
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to the provisions containing the public benefit or benefits that |
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are specified in the certificate of formation under Section |
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3.007(e) or imposing requirements under Section 21.957(c). |
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(e) Notwithstanding any other provision of this section, a |
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nonprofit nonstock corporation may not be a constituent corporation |
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to any merger or consolidation governed by this section. |
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Sec. 21.955. STOCK CERTIFICATES; NOTICES REGARDING |
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UNCERTIFICATED STOCK. (a) A stock certificate issued by a public |
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benefit corporation must note conspicuously that the corporation is |
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a public benefit corporation formed under this subchapter. |
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(b) A notice sent by a public benefit corporation under |
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Section 3.205 must state conspicuously that the corporation is a |
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public benefit corporation formed under Section 3.007(e) and is |
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governed by this subchapter and the other applicable provisions of |
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this code. |
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Sec. 21.956. DUTIES OF DIRECTORS. (a) The board of |
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directors of a public benefit corporation shall manage or direct |
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the business and affairs of the corporation in a manner that |
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balances: |
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(1) the pecuniary interests of the shareholders; |
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(2) the best interests of those persons materially |
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affected by the corporation's conduct; and |
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(3) the specific public benefit or benefits specified |
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in the corporation's certificate of formation. |
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(b) A director of a public benefit corporation does not, by |
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virtue of the public benefit provisions specified in the |
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certificate of formation as provided by Section 3.007(e) or by |
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virtue of the purpose and requirements of Sections 21.953(a) and |
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(b), owe any duty to any person because of: |
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(1) any interest the person has in the public benefit |
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or benefits specified in the certificate of formation; or |
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(2) any interest materially affected by the |
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corporation's conduct. |
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(c) With respect to a decision implicating the balance |
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requirement of Subsection (a), a director of a public benefit |
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corporation is considered to have satisfied the director's |
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fiduciary duties to shareholders and the corporation if the |
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director's decision is both informed and disinterested and a |
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decision that a person of ordinary, sound judgment would approve. |
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(d) The certificate of formation of a public benefit |
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corporation may include a provision that any disinterested failure |
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of a director to satisfy the requirements of this section does not, |
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for the purposes of the applicable provisions of this code, |
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constitute an act or omission not in good faith or a breach of the |
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duty of loyalty. |
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Sec. 21.957. PERIODIC STATEMENTS AND THIRD-PARTY |
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CERTIFICATION. (a) A public benefit corporation shall include in |
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each notice of a meeting of shareholders a statement to the effect |
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that the corporation is a public benefit corporation governed by |
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this subchapter. |
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(b) A public benefit corporation, at least biennially, |
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shall provide to the corporation's shareholders a statement |
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pertaining to the corporation's promotion of the public benefit or |
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benefits specified in the corporation's certificate of formation |
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and promotion of the best interests of those materially affected by |
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the corporation's conduct. The statement must include: |
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(1) the objectives the board of directors has |
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established to promote the public benefit or benefits and |
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interests; |
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(2) the standards the board of directors has adopted |
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to measure the corporation's progress in promoting the public |
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benefit or benefits and interests; |
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(3) objective factual information based on those |
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standards regarding the corporation's success in meeting the |
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objectives for promoting the public benefit or benefits and |
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interests; and |
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(4) an assessment of the corporation's success in |
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meeting the objectives and promoting the public benefit or benefits |
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and interests. |
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(c) The certificate of formation or bylaws of a public |
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benefit corporation may require that the corporation: |
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(1) provide the statement required by Subsection (b) |
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more frequently than biennially; |
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(2) make the statement required by Subsection (b) |
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available to the public; or |
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(3) use a third-party standard in connection with or |
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attain a periodic third-party certification addressing the |
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corporation's promotion of the public benefit or benefits specified |
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in the certificate of formation or the best interests of those |
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persons materially affected by the corporation's conduct. |
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Sec. 21.958. DERIVATIVE SUITS. (a) In this section, |
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"shareholder" means: |
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(1) shareholders of a public benefit corporation that |
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own, individually or collectively, at least two percent of the |
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corporation's outstanding shares; or |
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(2) shareholders of a public benefit corporation the |
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shares of which are listed on a national securities exchange that |
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own the lesser of: |
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(A) the percentage of shares described by |
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Subdivision (1); or |
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(B) shares whose market value is at least |
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$2,000,000. |
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(b) A shareholder of a public benefit corporation may bring |
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a derivative action to enforce compliance with the requirements of |
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Section 21.956(a). |
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Sec. 21.959. NO EFFECT ON OTHER CORPORATIONS. Except as |
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provided by Section 21.954, this subchapter does not apply to a |
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corporation that is not a public benefit corporation. |
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SECTION 3. This Act takes effect September 1, 2017. |