Bill Caption

Relating to authorizing the formation of public benefit corporations.

Fiscal Notes

No significant fiscal implication to the state is anticipated.

Bill Analysis

HB 3488 would amend the Business Organizations Code to authorize a for-profit corporation to elect to become a public benefit corporation. This bill would require the board of directors to operate business affairs in a manner that balances the shareholders’ interests and a public benefit or benefits as specified in the certificate of formation. Shareholders would be authorized to maintain a derivative action to enforce compliance with the requirements of the board of directors. Finally, conditions for the issuing of stock would be established.

Vote Recommendation Notes

This bill attempts to address a problem that when when a corporation states a social purpose the extent of the duty of the board of directors is unclear. Given that electing to become a public benefit corporation and being subject to the regulations established in this bill is voluntary, we remain neutral.