Source: https://code.dccouncil.us/dc/council/code/titles/29/chapters/13/
Timestamp: 2019-04-25 14:36:42+00:00

Document:
D.C. Law Library - Chapter 13. Benefit Corporations.
↪ Chapter 13. Benefit Corporations.
This chapter may be cited as the “Benefit Corporation Act of 2012”.
(B) The status of which as a benefit corporation has not been terminated under § 29-1301.06.
(B) A person with one or more of the powers, duties, or rights of a benefit director to the extent provided in the bylaws under § 29-1303.02.
(B) A violation of any obligation, duty, or standard of conduct under this chapter.
(4) “Benefit officer” means the individual designated as the benefit officer of a benefit corporation under § 29-1303.04.
(5) “General public benefit” means the material positive impact that the business and operations of a benefit corporation has on society and the environment, taken as a whole, assessed against a third-party standard.
(A) The person is, or has been within the last 3 years, an employee other than a benefit officer of the benefit corporation or a subsidiary of the benefit corporation.
(B) An immediate family member of the person is, or has been within the last 3 years, an executive officer other than a benefit officer of the benefit corporation or its subsidiary.
(ii) An entity of which the person is a director, an officer, or a manager or in which the person owns beneficially or of record 5% or more of the outstanding equity interests.
(i) The shareholders of every class or series shall be entitled to vote as a separate voting group on the corporate action regardless of a limitation stated in the articles of incorporation or bylaws on the voting rights of any class or series.
(ii) The corporate action must be approved by vote of the shareholders of each voting group entitled to cast at least 2/3 of the votes that all shareholders of the voting group are entitled to cast on the action.
(i) The holders of each class or series of equity interest in the entity that are entitled to receive a distribution of any kind from the entity shall be entitled as a separate voting group to vote on or consent to the action regardless of any otherwise applicable limitation on the voting or consent rights of any class or series.
(ii) The action must be approved by vote or consent of each voting group described in sub-subparagraph (i) of this subparagraph entitled to cast at least 2/3 of the votes or consents that all the members of the group are entitled to cast on the action.
(G) The accomplishment of any other particular benefit on society or the environment.
(9) “Subsidiary” means, subject to subsection (b) of this section, in relation to a person, an entity in which the person owns beneficially or of record 50% or more of the outstanding equity interests.
(III) Businesses whose performance is assessed against the standard.
(III) An accounting of the sources of financial support for the organization, with sufficient detail to disclose any relationships that could reasonably be considered to present a potential conflict of interest.
(b) For purposes of the definitions of the terms “independent” and “subsidiary” in subsection (a) of this section, a percentage of ownership in an entity shall be calculated as if all outstanding rights to acquire equity interests in the entity have been exercised.
(a) This chapter shall be applicable to all benefit corporations.
(b) This chapter shall not affect a statute or rule of law that is applicable to a business corporation that is not a benefit corporation, and shall not in and of itself create an implication that a contrary or different rule is applicable to a business corporation and not a benefit corporation.
(c) Except as otherwise provided in this chapter, Chapters 1, 2, and 3 of this title shall apply to a benefit corporation organized under this chapter. A benefit corporation may simultaneously be subject to this chapter and one or more other chapters of this title.
(d) A provision of the articles of incorporation or bylaws of a benefit corporation may not relax, be inconsistent with, or supersede a provision of this chapter.
§ 29–1301.04. Formation of benefit corporations.
A benefit corporation must be formed in accordance with Chapter 3 of this title, but its articles of incorporation must also state that it is a benefit corporation.
§ 29–1301.05. Election of status.
(a) An existing business corporation may become a benefit corporation under this chapter by amending its articles of incorporation so that they contain, in addition to the requirements of § 29-308.01, a statement that the corporation is a benefit corporation. To be effective, the amendment must be adopted by at least the minimum status vote.
(B) The surviving, new, or resulting entity in the merger, consolidation, or share exchange is to be a benefit corporation.
(2) To be effective, a plan of merger, consolidation or share exchange subject to this subsection must be adopted by at least the minimum status vote.
This section is referenced in § 29-1301.06.
§ 29–1301.06. Termination of status.
(a) A benefit corporation may terminate its status as a benefit corporation and cease to be subject to this chapter by amending its articles of incorporation and deleting the provision required by § 29-1301.05. To be effective, the amendment must be adopted by at least the minimum status vote.
(b) If a plan would have the effect of terminating the status of a business corporation as a benefit corporation, to be effective, the plan must be adopted by at least the minimum status vote. Any sale, lease, exchange, or other disposition of all or substantially all of the assets of a benefit corporation, unless the transaction is in the usual and regular course of business, shall not be effective unless the transaction is approved by at least the minimum status vote.
This section is referenced in § 29-1301.02.
(a) A benefit corporation shall have a purpose of creating general public benefit. This purpose is in addition to its purpose under § 29-303.01.
(b) The articles of incorporation of a benefit corporation may identify one or more specific public benefits that it is the purpose of the benefit corporation to create in addition to its purposes under § 29-303.01 and subsection (a) of this section. The identification of a specific public benefit under this subsection does not limit the obligation of a benefit corporation under subsection (a) of this section.
(c) The creation of general public benefit and specific public benefit under subsections (a) and (b) of this section is in the best interests of the benefit corporation.
(d) A benefit corporation may amend its articles of incorporation to add, amend, or delete the identification of a specific public benefit for that benefit corporation. To be effective, the amendment must be adopted by at least the minimum status vote.
(e) A professional corporation that is a benefit corporation does not violate § 29-505 by having its purpose be to create general public benefit or a specific public benefit.
§ 29–1303.01. Standard of conduct for directors.
(3) Need not give priority to the interests of a particular person or group referenced in paragraph (1) or (2) of this subsection over the interests of any other person or group, unless the benefit corporation has stated in its articles of incorporation its intention to give priority to certain interests related to its accomplishment of its general public benefit purpose or of a specific public benefit purpose identified in its articles of incorporation.
(b) The consideration of interests and factors in the manner required by subsection (a) of this section does not constitute a violation of § 29-306.30.
(2) Failure of the benefit corporation to create general public benefit or specific public benefit.
(d) A director does not have a duty to a person that is a beneficiary of the general public benefit purpose or a specific public benefit purpose of a benefit corporation arising from the status of the person as a beneficiary.
This section is referenced in § 29-1301.02, § 29-1303.02, and § 29-1303.03.
(2) Shall have, in addition to the powers, duties, rights, and immunities of the other directors of the benefit corporation, the powers, duties, rights, and immunities provided in this subchapter.
(b) The benefit director shall be elected, and may be removed, in the manner provided by subchapter VI of Chapter 3 of this title, and shall be an individual who is independent. The benefit director may serve as the benefit officer at the same time as serving as the benefit director. The articles of incorporation or bylaws of a benefit corporation may prescribe additional qualifications of the benefit director not inconsistent with this section.
(2) Whether the directors and officers complied with §§ 29-1303.01(a) and 29-1303.03(a), respectively.
(3) If, in the opinion of the benefit director, the benefit corporation or its directors or officers failed to comply with §§ 29-1303.01(a) and 29-1303.03(a), a description of the ways in which the benefit corporation or its directors or officers failed to comply.
(d) The acts of an individual in the capacity of a benefit director shall constitute for all purposes acts of that individual in the capacity of a director of the benefit corporation.
(e)(1) If an agreement among the shareholders of a benefit corporation under § 29-305.42 provides that the powers and duties conferred or imposed upon the board of directors shall be exercised or performed by a person other than the directors, the bylaws of a benefit corporation must provide that the persons or shareholders who perform the duties of the board of directors include a person with the powers, duties, rights, and immunities of a benefit director.
(ii) The bylaws make those procedures applicable.
(4) A violation of criminal law.
This section is referenced in § 29-1301.02 and § 29-1304.01.
§ 29–1303.03. Standard of conduct for officers.
(2) It is reasonably apparent to the officer that the matter may have a material effect on the creation of general public benefit or a specific public benefit identified in the articles of incorporation of the benefit corporation.
(b) The consideration of interests and factors as provided by subsection (a) of this section shall not constitute a violation of § 29-306.42.
(2) Failure of the benefit corporation to pursue or create general public benefit or specific public benefit.
(d) An officer does not have a duty to a beneficiary of the general public benefit purpose or a specific public benefit purpose of a benefit corporation arising from the beneficiary’s status.
This section is referenced in § 29-1303.02.
(a) A benefit corporation may designate a benefit officer.
(2) The duty to prepare the benefit report required by § 29-1304.01.
§ 29–1303.05. Right of action.
(2) Violation of a duty or standard of conduct under this chapter.
(b) A benefit corporation shall not be liable for monetary damages under this chapter for any failure of the benefit corporation to pursue or create general public benefit or a specific public benefit.
(D) Other persons as specified in the articles of incorporation or bylaws of the benefit corporation.
§ 29–1304.01. Annual benefit report.
(D) Any circumstances that have hindered the pursuit or creation of the general public benefit purpose and any specific public benefit purpose.
(B) If the third-party standard was not applied consistently, an explanation of the reasons for any inconsistent application.
(3) The name of the benefit director and the benefit officer, if any, and the address to which correspondence to each of them may be directed.
(4) The compensation paid by the benefit corporation during the year to each director in the capacity of a director.
(6) The statement of the benefit director described in § 29-1303.02(c).
(7) A statement of any connection between the organization that established the third-party standard, or its directors, officers, or material owners, and the benefit corporation or its directors, officers, or material shareholders, including any financial or governance relationship which might materially affect the credibility of the use of the third-party standard.
(B) The person with the powers, duties, and rights of a benefit director if required by § 29-1303.02(e).
(2) At the same time that the benefit corporation delivers any other annual report to its shareholders.
(c) A benefit corporation shall post all of its benefit reports on the public portion of its website, if any, but the compensation paid to directors and financial or proprietary information included in the benefit reports may be omitted from the benefit reports as posted.
(d) If a benefit corporation does not have a website, the benefit corporation shall provide a copy of its most recent benefit report, without charge, to any person that requests a copy.
(e) The benefit corporation shall deliver a copy of the benefit report to the Mayor for filing when filing the biennial report required by § 29-102.11, but the compensation paid to directors and financial or proprietary information included in the benefit report may be omitted from the copy of the benefit report that is delivered to the Mayor.
This section is referenced in § 29-1303.02 and § 29-1303.04.

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