FPC’s were passed as part of legislation called the “Corporate Flexibility Act.” That bill was amended and approved by Governor Jerry Brown in October 2014, and became effect at the start of the new year.
How many FPC’s incorporated in California?
According to the language in the amendment, 62 FPC’s have been formed since the new legal form became effective on January 1, 2012.
Ways “Social Purpose Corporations” in California differ from previously called “Flexible Purpose Corporations”
- New name. The name has been changed. In some ways the updated name may make the focus on impact more clear, both to companies considering the name change as well as their potential customers and funders.
- Directors are now required to take company mission into account in decision-making. In its previous form, a company’s directors were permitted to take a company’s ‘special purpose’ or mission into consideration. In the amended language directors of a SPC are “required to consider and exercise discretion to further the corporation’s special “social purpose.””
- Provides dissenters’ rights to SPC shareholders converting to another form or in the case of merger with a non-SPC.
- Makes it easier for out-of-state companies to reincorporate as an SPC in California.
Were the changes opposed?
CA SPC’s and DE PBC’s look like siblings, with CA Benefit Corps a close cousin
With all of the changes, and widespread passage of benefit corporation legislation across the country (i.e. as of January 2015, 27 jurisdictions have passed a form of benefit corporation) it bears mention to note that each state passes its own bill. I.e. benefit corporations or social purpose corporations aren’t “franchised” to look and sound exactly the same as in other states. The provisions depend a great deal on the state’s business and economic landscape and interest in social impact.
That being said, it is interesting that Delaware public benefit corporations (benefit corporation legislation was passed in 2013) is actually more similar to California social purpose corporations than to California benefit corporations. The California benefit corporation has a higher bar for social impact measurement and reporting, among other differences, and more closely resembles the benefit corporation model legislation.
- Official Bill Analysis on CA.Gov
- “Goodbye Flexible Purpose Corporation, Hello Social Purpose Corporation” [Law for Change]
- “Flexible Purpose Corporations: Come January 2015, They will be Social Purpose Corporations” [For Purpose Law Group]
- “Flexible Purpose Corporations Change Their Name” [Socentlaw]
- 2 Social Enterprise Bills in California: Key Features of AB 361 and SB 201 [Innov8Social]