Joining twenty-three other states and the District of Columbia, legislators in New Hampshire and Connecticut recently approved bills that permit businesses to operate as benefit corporations. (Note: benefit corporations are sometimes referred to as "B Corps.") Each bill currently awaits signature from its chief executive.
New Hampshire's bill (which you can find here) is nearly identical to the Model Act (which you can find here). There are some tweaks, however. For example, if the New Hampshire Secretary of State determines that a benefit corporation has neglected its statutory duty to provide an annual benefit-report, then the Secretary is required to administratively dissolve the corporation. And New Hampshire seems to have taken a cue from Delaware and has made a small step back from third-party standards.
Like New Hampshire's bill, Connecticut's (which you can find here) generally adheres to the Model Act. Minor changes include the omission of the requirement that a benefit corporation file its annual benefit-report with the Secretary of State. In addition, the bill tinkers with the "standing" requirements for bringing benefit enforcement proceedings. Under the Model Act, a party seeking to file a benefit enforcement proceeding must own 2% of the company's shares or 5% of equity interests. Under Connecticut's bill, a party must own 5% of the shares or 10% of equity interests.
Not all of the differences are minor—Connecticut's bill includes a unique, innovative provision directed at "legacy preservation." Under this provision, a benefit corporation that has been in existence for at least two years can amend its certificate of incorporation to include a "legacy-preservation provision." Once enacted, the legacy-preservation provision requires a dissolved benefit corporation to distribute its remaining assets to a charitable organization or another benefit corporation that has enacted a legacy-preservation provision. The legacy-preservation provision also protects the benefit corporation's mission in the event of mergers and acquisitions.
With two more states joining the ranks, benefit-corporation legislation is reaching a critical mass. Our team is ready to help you navigate these largely uncharted waters.
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