Arkansas Code of 1987 (2023) › Title 4 - BUSINESS AND COMMERCIAL LAW (§§ 4-1-101 — 4-119-105) › Subtitle 3 - CORPORATIONS AND ASSOCIATIONS (§§ 4-25-101 — 4-38-1203) › Chapter 36 - ARKANSAS BENEFIT CORPORATION ACT (§§ 4-36-101 — 4-36-401) › Subchapter 1 - PRELIMINARY PROVISIONS (§§ 4-36-101 — 4-36-106) › Section 4-36-103 - Definitions

(a)
As used in this chapter:
(1)
"Benefit corporation" means a business corporation that is subject to this chapter;
(2)
"Benefit director" means the director designated as the benefit director of a benefit corporation under §
4-36-302
;
(3)
"Benefit enforcement proceeding" means a claim or action for:
(A)
Failure of a benefit corporation to pursue or create a general public benefit or a specific public benefit purpose as stated in its articles of incorporation; or
(B)
Violation of an 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 §
4-36-304
;
(5)
"General public benefit" means a material positive impact on society and the environment, taken as a whole, assessed against a third-party standard, from the business and operations of a benefit corporation;
(6)
(A)
"Independent" means having no material relationship with a benefit corporation or a subsidiary of the benefit corporation.
(B)
A person shall be independent even if serving as benefit director or benefit officer.
(C)
A material relationship between a person and a benefit corporation or its subsidiaries is conclusively presumed to exist if:
(i)
The person is, or has been in the last three (3) years, an employee other than a benefit officer of the benefit corporation or a subsidiary of the benefit corporation;
(ii)
An immediate family member of the person is, or has been in the last three (3) years, an executive officer other than a benefit officer of the benefit corporation or its subsidiary; or
(iii)
There is beneficial or record ownership of five percent (5%) or more of the outstanding shares of the benefit corporation by the person or an association:
(a)
Of which the person is a director, an officer, or a manager; or
(b)
In which the person owns beneficially or of record five percent (5%) or more of the outstanding equity interests;
(7)
"Minimum status vote" means:
(A)
In the case of a business corporation, in addition to any other required approval or vote, the satisfaction of the following conditions:
(i)
The shareholders of a class or series may vote as a class on the corporate action regardless of a limitation stated in the articles of incorporation or bylaws on the voting rights of the class or series; and
(ii)
The corporate action shall be approved by vote of the shareholders of each class or series entitled to cast at least two-thirds (2/3) of the votes that all shareholders of the class or series are entitled to cast on the action.
(B)
In the case of a domestic entity other than a business corporation, in addition to any other required approval, vote, or consent, the satisfaction of the following conditions:
(i)
The holders of a class or series of equity interest in the entity that are entitled to receive a distribution from the entity may vote on or consent to the action regardless of an otherwise applicable limitation on the voting or consent rights of the class or series; and
(ii)
The action shall be approved by vote or consent of the holders described in subdivision (7)(B)(i) of this section entitled to cast at least two-thirds (2/3) of the votes or consents that all of those holders are entitled to cast on the action;
(8)
"Specific public benefit" means:
(A)
Providing low-income or underserved individuals or communities with beneficial products or services;
(B)
Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business;
(C)
Preserving the environment;
(D)
Improving human health;
(E)
Promoting the arts, sciences, or advancement of knowledge;
(F)
Increasing the flow of capital to entities with a public benefit purpose; and
(G)
Conferring any other particular benefit on society or the environment;
(9)
"Subsidiary" means in relation to a person, an association in which the person owns beneficially or of record fifty percent (50%) or more of the outstanding equity interests; and
(10)
"Third-party standard" means a recognized standard for defining, reporting, and assessing corporate social and environmental performance that is:
(A)
Comprehensive in that it assesses the effect of the business and its operations on the interests listed in §
4-36-301(a)(1)(B)
-(E);
(B)
Developed by an organization that is independent of the benefit corporation and satisfies the following:
(i)
Not more than one-third (1/3) of the members of the governing body of the organization are representatives of:
(a)
An association of businesses operating in a specific industry, the performance of whose members is measured by the standard;
(b)
Businesses from a specific industry or an association of businesses in that industry; or
(c)
A business whose performance is assessed against the standard; and
(ii)
The organization is not materially financed by an association or business described in subdivision (10)(B)(i) of this section;
(C)
Credible because the standard is developed by a person that both:
(i)
Has access to necessary expertise to assess overall corporate social and environmental performance; and
(ii)
Uses a balanced multistakeholder approach, including a public comment period of at least thirty (30) days to develop the standard; and
(D)
Transparent because the following information is publicly available:
(i)
The standard criteria considered if measuring the overall social and environmental performance of a business;
(ii)
The relative weighting factor of those criteria;
(iii)
The development and revision of the standard, including:
(a)
The identity of the directors, officers, material owners, and the governing body of the organization that developed and controls revisions to the standard; and
(b)
The process by which revisions to the standard and changes to the membership of the governing body are made; and
(iv)
An accounting of the sources of financial support for the organization, with sufficient detail to disclose a relationship that could reasonably be considered to present a potential conflict of interest.
(b)
For purposes of the definitions of "independent" and "subsidiary" in subsection (a) of this section, a percentage of ownership in an entity is computed as if all outstanding rights to acquire equity interests in the association had been exercised.
Added by Act 2013, No. 1388,§ 1, eff. 8/16/2013.