Code Section Group

Corporations Code - CORP

TITLE 1. CORPORATIONS [100 - 14631]

  ( Title 1 enacted by Stats. 1947, Ch. 1038. )

DIVISION 3. CORPORATIONS FOR SPECIFIC PURPOSES [12000 - 14631]

  ( Division 3 enacted by Stats. 1947, Ch. 1038. )

PART 13. BENEFIT CORPORATIONS [14600 - 14631]

  ( Part 13 added by Stats. 2011, Ch. 728, Sec. 1. )

CHAPTER 3. Accountability [14620 - 14623]
  ( Chapter 3 added by Stats. 2011, Ch. 728, Sec. 1. )

14620.
  

(a) A director shall perform the duties of a director including duties as a member of any committee of the board upon which the director may serve, in good faith, in a manner the director believes to be in the best interests of the benefit corporation and with that care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.

(b) In discharging their respective duties, and in considering the best interests of the benefit corporation, the board of directors, committees of the board, and individual directors of a benefit corporation shall consider the impacts of any action or proposed action upon all of the following:

(1) The shareholders of the benefit corporation.

(2) The employees and workforce of the benefit corporation and its subsidiaries and suppliers.

(3) The interests of customers of the benefit corporation as beneficiaries of the general or specific public benefit purposes of the benefit corporation.

(4) Community and societal considerations, including those of any community in which offices or facilities of the benefit corporation or its subsidiaries or suppliers are located.

(5) The local and global environment.

(6) The short-term and long-term interests of the benefit corporation, including benefits that may accrue to the benefit corporation from its long-term plans and the possibility that these interests may be best served by retaining control of the benefit corporation rather than selling or transferring control to another entity.

(7) The ability of the benefit corporation to accomplish its general, and any specific, public benefit purpose.

(c) In discharging their respective duties, the persons described in subdivision (b) may consider any of the following:

(1) The resources, intent, and conduct, including past, stated, and potential conduct, of any person seeking to acquire control of the corporation.

(2) Any other pertinent factors or the interests of any other person or group.

(d) In discharging their respective duties, the persons described in subdivision (a) shall not be required to give priority to any particular factor or the interests of any particular person or group referred to in subdivision (b) or (c) over any other factor or the interests of any other person or group unless the benefit corporation has stated its intention to give priority to a specific public benefit purpose identified in the articles.

(e) In performing the duties of a director, a director shall be entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by any of the following:

(1) One or more officers or employees of the benefit corporation whom the director believes to be reliable and competent in the matters presented.

(2) Counsel, independent accountants, or other persons as to matters that the director believes to be within those persons’ professional or expert competence.

(3) A committee of the board upon which the director does not serve, as to matters within its designated authority, which committee the director believes to merit confidence, so long as, in any of those cases, the director acts in good faith, after reasonable inquiry when the need therefor is indicated by the circumstances and without knowledge that would cause that reliance to be unwarranted.

(f) A director shall not be liable for monetary damages under this part for any failure of the benefit corporation to create a general or specific public benefit.

(g) A person who performs the duties of a director in accordance with this part shall not be liable for monetary damages for any alleged failure to discharge the person’s obligations as a director.

(h) In addition to the limitations provided in subdivisions (f) and (g), the liability of a director for monetary damages may be eliminated or limited in a benefit corporation’s articles to the extent provided in paragraph (10) of subdivision (a) of Section 204.

(i) A director shall not have a fiduciary duty to a person that is a beneficiary of the general or specific public benefit purposes of a benefit corporation arising from the status of the person as a beneficiary.

(j) A director of a foreign corporation that is subject to Section 2115 shall not be subject to Section 309 and shall be subject instead to this section if the director of the foreign corporation is subject to duties under its articles of incorporation, bylaws, or the law of its jurisdiction of incorporation similar to the duties of directors under this section.

(Added by Stats. 2011, Ch. 728, Sec. 1. Effective January 1, 2012.)

14621.
  

(a) The board of directors of a benefit corporation shall prepare for inclusion in the annual benefit report to shareholders required by Section 14630, a statement indicating whether, in the opinion of the board of directors, the benefit corporation failed to pursue its general, and any specific, public benefit purpose in all material respects during the period covered by the report.

(b) If, in the opinion of the board of directors, the benefit corporation failed to pursue its general, and any specific, public benefit purpose, the statement required by subdivision (a) shall include a description of the ways in which the benefit corporation failed to pursue its general, and any specific, public benefit purpose.

(Added by Stats. 2011, Ch. 728, Sec. 1. Effective January 1, 2012.)

14622.
  

(a) Each officer of a benefit corporation shall consider the interests and factors described in Section 14620 in the manner provided in that section when either of the following applies:

(1) The officer has discretion to act with respect to a matter.

(2) It reasonably appears to the officer that the matter may have a material effect on any of the following:

(A) The creation of a general or specific public benefit by the benefit corporation.

(B) Any of the interests or factors referred to in subdivision (b) of Section 14620.

(b) The consideration by an officer of interests and factors in the manner described in subdivision (a) shall not constitute a violation of the duties of the officer.

(c) An officer shall not be liable for monetary damages under this part for any of the following:

(1) Any action taken as an officer if the officer performed the duties of the position in compliance with this section.

(2) Any failure of the benefit corporation to create a general or specific public benefit.

(d) An officer shall not have a fiduciary duty to a person that is a beneficiary of the general or specific public benefit purposes of a benefit corporation arising from the status of the person as a beneficiary.

(Added by Stats. 2011, Ch. 728, Sec. 1. Effective January 1, 2012.)

14623.
  

(a) No person may bring an action or assert a claim against a benefit corporation or its directors or officers under this chapter except in a benefit enforcement proceeding.

(b) A benefit enforcement proceeding may be commenced or maintained only as follows:

(1) Directly by the benefit corporation.

(2) Derivatively by any of the following:

(A) A shareholder.

(B) A director.

(C) A person or group of persons that owns beneficially or of record 5 percent or more of the equity interests in an entity of which the benefit corporation is a subsidiary.

(D) Other persons as have been specified in the articles or bylaws of the benefit corporation.

(c) A benefit corporation shall not be liable for monetary damages under this part for any failure of the benefit corporation to create a general or specific public benefit.

(d) If the court in a benefit enforcement proceeding finds that a failure to comply with this part was without justification, the court may award an amount sufficient to reimburse the plaintiff for the reasonable expenses incurred by the plaintiff, including attorney’s fees and expenses, in connection with the benefit enforcement proceeding.

(Added by Stats. 2011, Ch. 728, Sec. 1. Effective January 1, 2012.)

CORPCorporations Code - CORP