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Thursday, June 9, 2011

Benefit Corporation and Flexible Purpose Corporation Legislation Pass

In their respective next steps towards becoming law, California's two separate pieces of legislation providing for a social corporate form passed their individual next hurdles, when the Benefit Corporation legislation (AB361) passed the Assembly and the Flexible Purpose Corporation (SB201) passed the Senate.

AB361 passed the Assembly on May 26, by a vote of 58 to 17, with 5 Assembly members not voting, absent or abstaining.  The legislation has now moved to the Senate, where it will next be considered by the Banking and Finance Committee and by the Judiciary Committee.

The very next week, on June 1, SB201 passed the Senate with a vote of 37 to 1, with two Senators either absent or abstaining.  SB201 has now been read in the Assembly and will likely be assigned in the coming days to same committees in the Assembly.

California appears poised to be the first state in the United States that will offer entrepreneurs and investors a choice of models for creating social enterprises, given that it is rumored that the authors of the two pieces of legislation have committed to pass both.


*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. Business for Good.(SM) is a service mark of R. Todd Johnson. 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.

4 comments:

  1. This is awesome Todd! Congrats and looking forward to this becoming law!

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  2. just as a note, california would not technically be the first state-- similar legislation exists in MD, VT, NJ, VA (VA's to take effect on 7/1/11) and NYS recently passed the bill and is waiting on the governor's sign. however legislation was introduced in CA before MD or VT. to check status in different states, reference http://www.bcorporation.net/publicpolicy

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  3. Thanks, Anonymous! You are right to clarify the fact that a number of states have adopted either the Benefit Corporation legislation or the L3C legislation.

    My point, more accurately, was that California will be the first state to offer a choice, within the state (i.e., more than one form tailor-made for social entrepreneurs).

    -- todd

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