Senator Mark DeSaulnier (D-Concord) has introduced Senate Bill 1301, which he says will make it easier for companies to incorporate as socially responsible corporations in the state of California.
This bill strengthens previous efforts by Senator DeSaulnier to encourage companies to incorporate with a special purpose.
“Companies formed as Socially Responsible Corporations can promise that more than their shareholders will realize the benefits from the company’s success and subsequent investments,” Senator DeSaulnier said. “This bill promotes socially responsible business practices that will benefit our state. As the nation’s innovation leader, it is important that California provide options for socially conscious entrepreneurs.”
California took the lead in promoting the incorporation of companies with a socially responsible mission, when SB 201 (DeSaulnier) was signed in 2011. This bill established the new corporate form to allow California businesses to organize as a Flexible Purpose Corporation. This new corporate form, the “Flexible Purpose Corporation,” integrated the for-profit philosophy of the traditional corporation along with a “special purpose” mission. SB 201 encouraged and expressly permitted companies to pursue one or more charitable or public purpose activities in addition to creating economic value for shareholders. Several other states, including Delaware, followed California’s lead in creating flexible purpose corporate forms.
SB 1301 renames Flexible Purpose Corporations as Socially Responsible Corporations, to more accurately reflect the spirit of the law. Socially Responsible Corporations will now be required, and not just encouraged, to consider a special purpose.
SB 1301 will make it easier for companies from outside the state to incorporate or reincorporate as a “socially responsible corporation” in California. This bill also cleans up California code to conform to other states’ guidelines for the incorporation of flexible purpose or socially responsible companies.