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Benefit Corporation 2017-10-02T19:38:04+00:00

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California Benefit Corporation San Diego

California Benefit Corporation San Diego Summary

A California benefit corporation must adopt a purpose to create a general public benefit, defined as, “…a material positive impact on society and the environment, taken as a whole, as assessed against a third-party standard.” California Corp. Code § 14601(c).

Other than the specific provisions for California benefit corporations in the California Corporations Code, California benefit corporations are subject to the general provisions of the corporations code and operated similarly to other for profit corporations. While California benefit corporations must adopt a purpose to create a general public benefit, California benefit corporations are for profit corporations, not non-profit corporations.

A California benefit corporation is often mistakenly confused with the terms B-corporation or B-Corp. A California benefit corporation is a form of corporation under California law, whereas a B-corporation or B-Corp is a certification mark offered by B Lab that certifies the social and environmental performance of a benefit corporation. B Lab is not the only source of the third party assessment of a California benefit corporation required by California Corporations Code § 14621 and California Corporations Code § 14630.

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$525

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California Benefit Corporation San Diego Details

Public Benefit

The specific public benefit provided by a California benefit corporation may include any of the public benefits of California Corporations Code § 14601(e):

  • Providing low-income or underserved individuals or communities with beneficial products or services;
  • Promoting economic opportunity for individuals or communities beyond the creation of jobs in the ordinary course of business;
  • Preserving the environment;
  • Improving human health;
  • Promoting the arts, sciences, or advancement of knowledge;
  • Increasing the flow of capital to entities with a public benefit purpose; and
  • Accomplishing any other particular benefit for society or the environment.

Corporate Powers

California Corporations Code §§ 100-2319 applies to a California benefit corporation except when the general corporations code conflicts with, or is inconsistent with, the California benefit corporation legislation in California Corporations Code §§ 14600-14631. California Corporations Code § 14600(c).

Standard of Performance

A California benefit corporation must have the public benefit measured by a third party standard for defining, reporting, and assessing the corporate social and environmental performance. California Corporations Code § 14601(g). The third party standard was intended to reduce the likelihood of “greenwashing” its activities to appear to provide more public benefit than it actual provides. Under California Corporations Code § 14601(g) and California Corporations Code § 14620(b), the third party standard must assess:

  • The employees of the California benefit corporation and its subsidiaries and suppliers;
  • The customers of the California benefit corporation as beneficiaries of the public benefit purpose;
  • Community and societal considerations, including its offices and facilities and location of its subsidiaries and suppliers; and
  • Local and global environmental issues.

A California benefit corporation is permitted to self-certify against a third party standard and is not required to subject itself to an audit or certification of a third party. California Corporations Code § 14630(a)(2).

Board of Directors Fiduciary Duties

The fiduciary duties of a director of a California benefit corporation are set forth in California Corporations Code §14620 are similar to the duties of a standard corporation under California Corporations Code § 309 and include the duties of loyalty and care. The duties of benefit corporation directors are distinct from those under California Corporations Code § 309 in describing the duties of loyalty and care only as to the corporation itself and not duties of loyalty and care to the shareholders of the California benefit corporation, mentioning only the best interests of the corporation itself and not those of its shareholders.

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