California Flexible Purpose Corporation San Diego
Flexible Purpose Corporation San Diego Summary
The flexible corporation form was established in California in 2011 by the Corporate Flexibility Act of 2011. When the Corporate Flexibility Act of 2011 was modified by the Social Purpose Corporations Act in 2014 (effective January 1, 2015), California flexible purpose corporations became known as California social purpose corporations.
A California flexible purpose corporation is governed by both the Corporate Flexibility Act and the Social Purpose Corporations Act. California Corporations Code §§ 2500-3503. California flexible purpose corporations combine social objectives into standard corporation structures to allow for the adoption of both social and financial purposes.
California Flexible Purpose Corporation San Diego Details
A California flexible purpose corporation may engage in any line of business; however, a California flexible purpose corporation is subject to the banking laws, and professional corporations adopting California flexible purpose corporation status are limited to engaging only in such business not prohibited by the banking laws or professional corporation laws under which they are governed.
Subject to the limitations of its articles of incorporation, applicable law, and its special purpose, a California flexible purpose corporation has all the same powers of a standard corporation.
Balance of Financial and Social Purpose
A California flexible purpose corporation must adopt both a social and financial purpose. The social purpose must be stated in the articles of incorporation, and the social purpose may only be changed by a supermajority vote of its shareholders. When making corporate decisions, the board of directors of a California social purpose corporation is required to consider and weigh factors including: (1) the overall prospects of the California social purpose corporation; (2) the best interest of the social purpose; and (3) the best interest of the shareholders. A California social purpose corporation must also provide disclosure to its shareholders not only of its financial condition, but also its performance with respect to the pursuit of the social purpose.