HARRISBURG, October 26, 2011 — State Sen. Daylin Leach (D-Delaware/Montgomery) announced that yesterday his landmark legislation that would change the structure of business in Pennsylvania was unanimously approved by the Senate Judiciary Committee.
The legislation, Senate Bill 433, would create a new class of business that would provide for the recognition of Benefit Corporations (B-Corps) -- businesses that have the ability to more positively impact their communities and create a new incentive structure to encourage corporate activism. The Benefit Corporation class would reclassify the fiduciary duties of corporation directors, allowing them to take non-financial interests into consideration when making decisions for the corporation.
S.B. 433 would allow companies that aim to make a positive social and environmental impact on their communities to make those for benefit operations part of their corporate mission. Other corporation classes do not currently allow directors to take not-for-profit benefits into account. Under the new corporate classification model, Benefit Corporations could not be held liable for lost monetary value as a result of socially-conscious decisions made.
I am happy that my colleagues in the Senate approved this measure, as it will help Pennsylvania businesses take charge and make an impact on their surrounding communities if they so choose, Leach said. Hopefully, once the bill is brought to a vote on the Senate floor, it will be considered as agreeably as it was by the Judiciary Committee. Then, corporations will finally be able to do the right thing and incorporate charitable endeavors into their missions without the fear of legal repercussion.
Under the bill, the process of becoming a Benefit Corporation is entirely voluntary and based on shareholder desire. If a business chooses to become a Benefit Corporation, it must provide yearly disclosures of the public benefit efforts the company has undertaken to shareholders.
Similar legislation has been enacted in California, Hawaii, Virginia, Maryland, Virginia and New Jersey. Additionally, the bill has been passed in New York where it awaits the governor's signature. The legislation is supported by the Pennsylvania Bar Association. S.B. 433 now moves to the full Senate for consideration.
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