An Act Concerning the Establishment of Benefit Corporations
Maine Legislature, Session 129, LD 1519
Committee: Judiciary
Sponsors: HERBIG, FECTEAU, BREEN, FARRIN, AUSTIN, COLLINGS, GATTINE, PIERCE, SYLVESTER

Legislative Document
No. 1519
S.P. 468
In Senate, April 9, 2019
An Act Concerning the Establishment of Benefit Corporations
Reference to the Committee on Judiciary suggested and ordered printed.
DAREK M. GRANT
Secretary of the Senate
Presented by Senator HERBIG of Waldo.
Cosponsored by Representative FECTEAU of Biddeford and
Senators: BREEN of Cumberland, FARRIN of Somerset, Representatives: AUSTIN of Gray, 
COLLINGS of Portland, GATTINE of Westbrook, McLEAN of Gorham, PIERCE of 
Falmouth, SYLVESTER of Portland.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  13-C MRSA c. 18 is enacted to read:
CHAPTER 18
BENEFIT CORPORATIONS
SUBCHAPTER 1
GENERAL PROVISIONS
§1801.  Application and effect of chapter
1.  Application of chapter.  This chapter applies to all benefit corporations.
2.  Application of corporation law generally.  This chapter does not create an 
implication that a contrary or different rule of law applies to a corporation that is not a 
benefit corporation.  This chapter does not affect a statute or rule of law that applies to a 
corporation that is not a benefit corporation.
3.  Laws applicable.  Except as otherwise provided in this chapter, this Title is 
generally applicable to all benefit corporations.  A benefit corporation may be subject 
simultaneously to this chapter and Title 13, chapter 22-A.  This chapter supersedes other 
provisions of this Title and Title 13, chapter 22-A with regard to benefit corporations.
4.  Limit on articles and bylaws.  A provision of the articles of incorporation or 
bylaws of a benefit corporation may not limit, be inconsistent with or supersede a 
provision of this chapter.
§1802.  Definitions
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings.
1.  Benefit corporation.  "Benefit corporation" means a corporation:
A.  That has elected to become subject to this chapter pursuant to section 1804; and
B.  The status of which as a benefit corporation has not been terminated.
2.  Benefit director.  "Benefit director" means the director designated as the benefit 
director of a benefit corporation under section 1822.
3.  Benefit enforcement proceeding.  "Benefit enforcement proceeding" means a 
claim or action or proceeding for:
A.  Failure of a benefit corporation to pursue or create general public benefit or a 
specific public benefit purpose set forth in its articles; or
B.  Violation of any obligation, duty or standard of conduct under this chapter.
4.  Benefit officer.  "Benefit officer" means the individual designated as the benefit 
officer of a benefit corporation under section 1824.
5.  General public benefit.  "General public benefit" means a material positive 
impact on society and the environment, taken as a whole, assessed against a 3rd-party 
standard, from the business and operations of a benefit corporation.
6.  Independent.  "Independent" means having no material relationship with a benefit 
corporation or a subsidiary of the benefit corporation, except that serving as benefit 
director or benefit officer does not make an individual not independent.  A material 
relationship between an individual and a benefit corporation or any of its subsidiaries is 
presumed to exist if any of the following applies:
A.  The individual is, or has been within the last 3 years, an employee other than a 
benefit officer of the benefit corporation or a subsidiary;
B.  An immediate family member of the individual is, or has been within the last 3 
years, an executive officer other than a benefit officer of the benefit corporation or a 
subsidiary; and
C.  There is beneficial or record ownership of 5% or more of the outstanding shares 
of the benefit corporation, calculated as if all outstanding rights to acquire equity 
interests in the benefit corporation had been exercised, by:
(1)  The individual; or
(2)  An entity:
(a)  Of which the individual is a director, an officer or a manager; or
(b)  In which the individual owns beneficially or of record 5% or more of the 
outstanding equity interests, calculated as if all outstanding rights to acquire 
equity interests in the entity had been exercised.
7.  Minimum status vote.  "Minimum status vote" means:
A.  In the case of a corporation, in addition to any other required approval or vote, a 
vote to approve a corporate action:
(1)  In which the shareholders of every class or series are 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; 
and
(2)  That requires the affirmative vote of the shareholders of each class or series 
entitled to cast at least 2/3 of the votes that all shareholders of the class or series 
are entitled to cast on the action; and
B.  In the case of a domestic entity other than a corporation, in addition to any other 
required approval, vote or consent, a vote to approve a corporate action:
(1)  In which the holders of every class or series of equity interest in the entity 
that are entitled to receive a distribution of any kind from the entity are entitled 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; and
(2)  That requires the affirmative vote or consent of the holders described in 
subparagraph (1) entitled to cast at least 2/3 of the votes or consents that all of 
those holders are entitled to cast on the action.
8.  Specific public benefit.  "Specific public benefit" means any particular benefit to 
society or the environment, including without limitation:
A.  The provision of low-income or underserved individuals or communities with 
beneficial products or services;
B.  The promotion of economic opportunity for individuals or communities beyond 
the creation of jobs in the normal course of business;
C.  The protection or restoration of the environment;
D.  The improvement of human health;
E.  The promotion of the arts, sciences or advancement of knowledge; and
F.  The increase of the flow of capital to entities that endeavor to benefit society or 
the environment.
9.  Subsidiary.  "Subsidiary" means, in relation to a person, an entity in which the 
person owns beneficially or of record 50% or more of the outstanding equity interests, 
calculated as if all outstanding rights to acquire equity interests in the entity had been 
exercised.
10.  Third-party standard.  "Third-party standard" means a recognized standard for 
defining, reporting and assessing corporate social and environmental performance that:
A.  Assesses the effects of the business and its operations upon the interests listed in 
section 1821, subsection 1;
B.  Is developed by an entity that:
(1)  Is not controlled by the benefit corporation;
(2)  Has access to necessary expertise to assess overall corporate social and 
environmental performance; and
(3)  Uses a balanced, multi-stakeholder approach to develop the standard, 
including a reasonable public comment period; and
C.  Provides for transparency by making the following information publicly 
available:
(1)  The criteria considered when measuring the overall social and environmental 
performance of a business and the relative weightings, if any, of those criteria;
(2)  The identity of the directors, officers, material owners and governing body of 
the entity that developed and controls revisions to the standard;
(3)  The process by which revisions to the standard and changes to the 
membership of the governing body are made; and
(4)  An accounting of the revenue and sources of financial support for the entity, 
with sufficient detail to disclose any relationships that could reasonably be 
considered to present a potential conflict of interest.
§1803.  Incorporation of benefit corporation
A benefit corporation must be incorporated in accordance with chapter 2, and its 
articles of incorporation must state that it is a benefit corporation.
§1804.  Election of benefit corporation status
1.  Existing corporation.  An existing 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 section 202, a statement that the corporation is a benefit 
corporation.  In order to be effective, the amendment must be adopted by at least the 
minimum status vote.
2.  Mergers, conversions and share exchanges.  This subsection governs mergers, 
conversions and share exchanges when the resulting entity is a benefit corporation.
A.  Except as provided in paragraph B, if a domestic entity that is not a benefit 
corporation is a party to a merger or conversion or the exchanging entity in a share 
exchange and the surviving, new or resulting entity in the merger, conversion or share 
exchange is to be a benefit corporation, the plan of merger, conversion or share 
exchange must be approved by the domestic entity by at least the minimum status 
vote.
B.  Paragraph A does not apply in the case of a corporation that is a party to a merger 
if the shareholders of the corporation are not entitled to vote on the merger pursuant 
to section 1105.
§1805.  Termination of benefit corporation status
1.  Termination.  A benefit corporation may terminate its status as such and cease to 
be subject to this chapter by amending its articles of incorporation to delete the provision 
required by section 1803 or 1804 to be stated in the articles of a benefit corporation.  In 
order to be effective, the amendment must be adopted by at least the minimum status 
vote.
2.  Mergers, conversions and share exchanges.  This subsection governs mergers, 
conversions and share exchanges when the resulting entity is not a benefit corporation.
A.  Except as provided in paragraph B, if a plan of merger, conversion or share 
exchange would have the effect of terminating the status of a corporation as a benefit 
corporation, the plan must be adopted by at least the minimum status vote in order to 
be effective.
B.  Paragraph A does not apply in the case of a corporation that is a party to a merger 
if the shareholders of the corporation are not entitled to vote on the merger pursuant 
to section 1105.
C.  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, is not effective unless the transaction is approved by at least the 
minimum status vote.
SUBCHAPTER 2
CORPORATE PURPOSES
§1811.  Corporate purposes
1.  General public benefit purpose.  A benefit corporation must have a purpose of 
creating general public benefit.  This purpose is in addition to its purpose under section 
301.
2.  Optional specific public benefit purpose.  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 section 301 and 
subsection 1.  The identification of a specific public benefit under this subsection does 
not limit the purpose of a benefit corporation to create general public benefit under 
subsection 1.
3.  Effect of purposes.  The creation of general public benefit and a specific public 
benefit under subsections 1 and 2 is in the best interests of the benefit corporation.
4.  Amendment.  A benefit corporation may amend its articles of incorporation to 
add, amend or delete the identification of a specific public benefit that it is the purpose of 
the benefit corporation to create.  In order to be effective, the amendment must be 
adopted by at least the minimum status vote.
5.  Professional corporation.  A professional corporation that is a benefit 
corporation does not violate Title 13, section 732 by having the purpose to create general 
public benefit or a specific public benefit.
SUBCHAPTER 3
ACCOUNTABILITY
§1821.  Standard of conduct for directors
1.  Consideration of interests.  In discharging the duties of their respective positions 
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 effects of any action or inaction upon:
A.  The shareholders of the benefit corporation;
B.  The employees and workforce of the benefit corporation, its subsidiaries and its 
suppliers;
C.  The interests of customers as beneficiaries of general public benefit or specific 
public benefit purposes of the benefit corporation;
D.  Community and societal factors, including those of each community in which 
offices or facilities of the benefit corporation, its subsidiaries or its suppliers are 
located;
E.  The local and global environment;
F.  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 the continued independence of 
the benefit corporation; and
G.  The ability of the benefit corporation to accomplish its general public benefit 
purpose and any specific public benefit purpose.
The board of directors, committees of the board and individual directors of a benefit 
corporation may also consider other pertinent factors or the interests of any other group 
that they consider appropriate and may give priority to an interest or factor according to 
the benefit corporation's articles of incorporation.
2.  Coordination with other provisions of law.  The consideration of interests and 
factors in the manner provided by subsection 1 does not constitute a violation of section 
832.
3.  Exoneration from personal liability.  Except as provided in the articles of 
incorporation, a director is not personally liable for monetary damages for:
A.  Any action or inaction in the course of performing the duties of a director under 
subsection 1 if the director performed the duties of office in compliance with section 
and this section; or
B.  Failure of the benefit corporation to pursue or create general public benefit or a 
specific public benefit.
4.  Limitation on standing.  A director does not have a duty to a person that is a 
beneficiary of general public benefit purpose or a specific public benefit purpose of a 
benefit corporation arising from the status of the person as a beneficiary.
5.  Business judgments.  A director who makes a business judgment in good faith 
fulfills the duty under this section if the director:
A.  Is not interested in the subject of the business judgment;
B.  Is informed with respect to the subject of the business judgment to the extent the 
director reasonably believes to be appropriate under the circumstances; and
C.  Rationally believes that the business judgment is in the best interests of the 
benefit corporation.
§1822.  Benefit director
1.  General rule.  The board of directors of a benefit corporation that is a public 
corporation shall, and the board of any other benefit corporation may, include a director, 
who:
A.  Is designated the benefit director; and
B.  Has, 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 
chapter for a benefit director.
2.  Election, removal and qualifications.  The benefit director must be elected, and 
may be removed, in the manner provided by chapter 8, subchapter 1.  Except as provided 
in subsection 6, the benefit director must be an individual who is independent.  The 
benefit director may also serve as the benefit officer.  The articles of incorporation or 
bylaws of a benefit corporation may prescribe additional qualifications of the benefit 
director not inconsistent with this subsection.
3.  Annual compliance statement.  The benefit director shall prepare, and the 
benefit corporation shall include in the annual benefit report to shareholders required by 
section 1832, the opinion of the benefit director on the following:
A.  Whether the benefit corporation acted in accordance with its general public 
benefit purpose and any specific public benefit purpose in all material respects during 
the period covered by the report; and
B.  Whether the directors and officers complied with section 1821, subsection 1 and 
section 1823, subsection 1, respectively.
If, in the opinion of the benefit director, the benefit corporation or its directors or officers 
failed to act or comply in the manner described in paragraphs A and B, the benefit 
director must provide in the report a description of the ways in which the benefit 
corporation or its directors or officers failed to act or comply.
4.  Status of actions.  An act or inaction of an individual in the capacity of a benefit 
director constitutes for all purposes an act of that individual in the capacity of a director 
of the benefit corporation.
5.  Exoneration from personal liability.  Regardless of whether the articles of 
incorporation of a benefit corporation include a provision eliminating or limiting the 
personal liability of directors authorized by section 202, subsection 2, paragraph D, a 
benefit director is not personally liable for an act or omission in the capacity of a benefit 
director unless the act or omission constitutes self-dealing, willful misconduct or a 
knowing violation of law.
6.  Professional corporation.  The benefit director of a professional corporation as 
defined in Title 13, section 723, subsection 4 does not need to be independent.
§1823.  Standard of conduct for officers
1.  General rule.  An officer of a benefit corporation shall consider the interests and 
factors described in section 1821, subsection 1 in the manner provided in section 1821, 
subsection 1 if:
A.  The officer has discretion to act with respect to a matter; and
B.  It reasonably appears to the officer that the matter may have a material effect on 
the creation by the benefit corporation of general public benefit or a specific public 
benefit identified in the articles of incorporation of the benefit corporation.
2.  Coordination with other provisions of law.  The consideration of interests and 
factors in the manner provided in subsection 1 does not constitute a violation of section 
843.
3.  Exoneration from personal liability.  Except as provided in the articles of 
incorporation, an officer is not personally liable for monetary damages for:
A.  An action or inaction as an officer in the course of performing the duties of an 
officer under subsection 1 if the officer performed the duties of the position in 
compliance with section 843 and this section; or
B.  Failure of the benefit corporation to pursue or create general public benefit or a 
specific public benefit.
4.  Limitation on standing.  An officer does not have a duty to a person that is a 
beneficiary of general public benefit purpose or a specific public benefit purpose of a 
benefit corporation arising from the status of the person as a beneficiary.
5.  Business judgments.  An officer who makes a business judgment in good faith 
fulfills the duty under this section if the officer:
A.  Is not interested in the subject of the business judgment;
B.  Is informed with respect to the subject of the business judgment to the extent the 
officer reasonably believes to be appropriate under the circumstances; and
C.  Rationally believes that the business judgment is in the best interests of the 
benefit corporation.
§1824.  Benefit officer
1.  Designation.  A benefit corporation may have an officer designated the benefit 
officer.
2.  Functions.  A benefit officer has:
A.  The powers and duties relating to the purpose of the corporation to create general 
public benefit or a specific public benefit provided by the bylaws or, absent 
controlling provisions in the bylaws, by resolution or order of the board of directors; 
and
B.  The duty to prepare the benefit report required by section 1831.
§1825.  Right of action
1.  General rule.  Except in a benefit enforcement proceeding, a person may not 
bring an action or assert a claim against a benefit corporation or its directors or officers 
with respect to:
A.  Failure to pursue or create general public benefit or a specific public benefit set 
forth in the articles of incorporation; or
B.  Violation of an obligation, duty or standard of conduct under this chapter.
2.  Limitation on liability of corporation.  A benefit corporation is not 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.
3.  Standing.  A benefit enforcement proceeding may be commenced or maintained 
only:
A.  Directly by the benefit corporation; or
B.  Derivatively in accordance with chapter 7, subchapter 4 by:
(1)  A person or group of persons that owned beneficially or of record at least 2% 
of the total number of shares of a class or series outstanding at the time of the act 
or omission complained of;
(2)  A director;
(3)  A person or group of persons that owned beneficially or of record 5% or 
more of the outstanding equity interests in an entity of which the benefit 
corporation is a subsidiary at the time of the act or omission complained of; or
(4)  Other persons as specified in the articles of incorporation or bylaws of the 
benefit corporation.
4.  Beneficial ownership.  For purposes of this section, a person is the beneficial 
owner of shares or equity interests if the shares or equity interests are held in a voting 
trust or by a nominee on behalf of the beneficial owner.
SUBCHAPTER 4
TRANSPARENCY
§1831.  Preparation of annual benefit report
1.  Contents.  A benefit corporation shall prepare an annual benefit report including:
A.  A narrative description of:
(1)  The ways in which the benefit corporation pursued general public benefit 
during the year and the extent to which general public benefit was created;
(2)  The ways in which the benefit corporation pursued a specific public benefit 
that the articles of incorporation state it is the purpose of the benefit corporation 
to create and the extent to which that specific public benefit was created;
(3)  Any circumstances that have hindered the creation by the benefit corporation 
of general public benefit or a specific public benefit; and
(4)  The process and rationale for selecting or changing the 3rd-party standard 
used to prepare the benefit report;
B.  An assessment of the overall social and environmental performance of the benefit 
corporation against a 3rd-party standard:
(1)  Applied consistently with any application of that standard in prior benefit 
reports; or
(2)  Accompanied by an explanation of the reasons for any inconsistent 
application or the change to that standard from the one used in the immediately 
prior report;
C.  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;
D.  The compensation paid by the benefit corporation during the year to each director 
in the capacity of a director;
E.  The statement of the benefit director described in section 1822, subsection 3; and
F.  A statement of any connection between the organization that established the 3rd-
party standard, or its directors, officers or any holder of 5% or more of the 
governance interests in the organization, and the benefit corporation, or its directors, 
officers or any holder of 5% or more of the outstanding shares of the benefit 
corporation, including any financial or governance relationship that might materially 
affect the credibility of the use of the 3rd-party standard.
2.  Change of benefit director.  If, during the year covered by a benefit report, a 
benefit director resigned from or refused to stand for reelection to the position of benefit 
director, or was removed from the position of benefit director, and the benefit director 
furnished the benefit corporation with any written correspondence concerning the 
circumstances surrounding the resignation, refusal or removal, the benefit report must 
include that correspondence as an exhibit.
3.  Audit not required.  Neither the benefit report nor the assessment of the 
performance of the benefit corporation in the benefit report required by subsection 1, 
paragraph B needs to be audited or certified by a 3rd party.
§1832.  Availability of annual benefit report
1.  Timing of report.  A benefit corporation shall send its annual benefit report to 
each shareholder on the earlier of:
A.  One hundred and twenty days following the end of the fiscal year of the benefit 
corporation; and
B.  At the same time the benefit corporation delivers any other annual report to its 
shareholders.
2.  Website posting.  A benefit corporation shall post all of its annual benefit reports 
on the public portion of its website.  The compensation paid to directors and financial or 
proprietary information included in the benefit reports may be omitted from the annual 
benefit reports as posted.
3.  Availability of copies.  If a benefit corporation does not have a website, the 
benefit corporation shall provide a copy of its most recent annual benefit report, without 
charge, to any person that requests a copy, but the compensation paid to directors and 
financial or proprietary information included in the annual benefit report may be omitted 
from the copy of the annual benefit report provided.
SUMMARY
This bill creates a statutory framework that allows a corporation to elect to become a 
benefit corporation by explicitly stating in its articles of incorporation that it has a 
purpose of creating general public benefit and allows such a corporation to state in its 
articles of incorporation one or more specific public benefit purposes, which are other 
than maximizing shareholder value.  "General public benefit" means a material positive 
impact on society and the environment, taken as a whole, assessed against a 3rd-party 
standard, from the business and operations of the benefit corporation.  A specific public 
benefit can be providing goods and services to underserved individuals and communities, 
the promotion of economic opportunities, protecting the environment, improving human 
health or other particular benefits to society or the environment.
A benefit corporation may be subject to a benefit enforcement proceeding for failing 
to pursue or create general public benefit or a specific public benefit as set forth in its 
articles of incorporation, or for a violation of any obligation, duty or standard of conduct 
imposed.
A benefit corporation must make its annual benefit report available publicly.