Governor Brown has signed SB 1301 by Senator Mark DeSaulnier (D-Concord) to encourage the formation of Social Purpose Corporations. This bill strengthens previous efforts by Senator DeSaulnier to encourage companies to incorporate with a special purpose.
“I thank Governor Brown for signing a bill that continues California’s commitment to encouraging the formation of businesses driven to do more than just maximize profits for their shareholders,” Senator DeSaulnier said. “By providing better corporate options for entrepreneurs, California can maintain its position as a leader in promoting socially conscious business practices. SB 1301 will only help the number of Social Purpose Corporations formed in California grow, attracting more socially conscious entrepreneurs to our state.”
Senator DeSaulnier carried legislation (SB 201) in 2011 to establish a new corporate form—a Flexible Purpose Corporation. This new corporate form integrated the for-profit philosophy of the traditional corporation along with a “special purpose” mission to encourage and expressly permit companies to pursue one or more charitable or public purpose activities in addition to creating economic value for shareholders. Washington and Delaware followed California’s lead in creating similar corporate forms.
SB 1301 renames Flexible Purpose Corporations as Social Purpose Corporations, to more accurately reflect the spirit of the law. SB 1301 seeks to strengthen and clean up the corporate code created under SB 201, by clarifying that directors of Social Purpose Corporations are required—and not just encouraged—to consider a special purpose. This bill also cleans up California code to better conform to other states’ guidelines and new corporate laws that have proven successful in encouraging companies to incorporate with a special mission.
According to the Secretary of State, a total of 62 Flexible Purpose Corporations have been formed since January 1, 2012.
Website of Senator Mark DeSaulnier:http://sd07.senate.ca.gov/
