The Freedom to Choose -- California May Be the First State to Offer a Choice to Social Entrepreneurs

by R. Todd Johnson*

In a prior post, I noted that California Senator Mark DeSaulnier had introduced the Corporate Flexibility Act of 2011.  His bill is a reintroduction of the bill he introduced during the last session of the Assembly (before Maryland and Vermont had taken any action on the Benefit Corporation legislation that has since passed in both states). Unfortunately for California social entrepreneurs, the budget battle in Sacramento last year made passage of the bill impossible.

Now, it seems that Californians may be the first to enjoy a choice for social entrepreneurs. Keith Bishop noted earlier this year that Assemblyperson Jared Huffman had introduced spot legislation in AB 361 -- a bill with no substance that could be entirely amended and restated after the legislation introduction deadline passed. In his blog, Bishop predicted that Huffman's bill was likely a spot bill for the purpose of later making changes to California's Corporation's and Securities Code.

It seems that Bishop may have been prescient.

Earlier this week, the folks at B Lab (the certifiers of B Corporations) added California to the list of states introducing Benefit Corporation legislation, with a reference to AB 361 suggesting that it may become the vehicle for a California version of the Benefit Corporation. (As you will note from the links, however, the only thing available for us today is the spot bill. And still no mention of the Flexible Purpose Corporation Legislation.)

In any event, California may now become the first State offering social entrepreneurs a real choice!  Imagine, a free marketplace of ideas where choice is king and where, not one, but two forms exist for creating a business focused on the flourishing of people, planet and profit.

Yea, California!  Yea, choice!  Yea, marketplace of ideas.

In my next post, I will compare the Benefit Corporation with the Flexible Purpose Corporation forms. If you have questions you'd like me to answer, please post a comment and I'll do my best.

Otherwise, stay tuned.

*Todd is a partner at the law firm of Jones Day, where he founded their Silicon Valley Office and runs their Renewable Energy and Sustainability Practice. The views expressed in this column are solely Todd’s personal views, not the views of Jones Day or its clients, and the information provided as to his affiliation with Jones Day is solely for purposes of identification and may not and should not be construed to imply endorsement or even support by Jones Day of the views expressed herein. © R. Todd Johnson, 2011. The thoughts, ideas and words expressed in this column are the property of R. Todd Johnson and may not be otherwise used or reprinted without express permission from Todd.