After the passage of benefit corporation legislation in big-hitter states such as California and New York, you may wonder what’s been happening with the policy momentum.Well, the quick update is that it has been forging ahead to new regions and new states.

Lousiana and Illinois, One Step Away

Eric Trojian, Director of B Lab Policy, announced today via social media that benefit corporation legislation passed in both Illinois and Louisiana. As with the other states, this means that it is now bound to the governors of those states for final signing and admission into state law.

You can learn more about the policy and law surrounding benefit corporation legislation on and find out the state-by-state breakdown.

Moving Forward in North Carolina Too

Trojian also provided a status update on benefit corporation legislation in North Carolina. There, the bill has passed the House Commerce Committee, with its next stop being the House floor. If it passes vote there, it is on track for approval from the governor.

Stay tuned for more developments on the newly minted benefit corporation law in LA and IL!

A Look at Past Legislation

Here are a few links to help put the legislation process in context:

I had the pleasure and unique opportunity to co-write a guest post for TriplePundit with David Jaber, a Principal at inNative–a full-service consultancy assisting companies and organizations meet their environmental and sustainability goals.

Below are a few excerpts. You can read the entire post here.
What is a third party standard used in Benefit corporations?
Baked into the Benefit corporation (in each of the seven states which have passed the new legal structure) is a commitment to transparency. This includes the requirement that they publish an annual benefit report that assesses performance against a third party standard.
In this context, a third party standard is litmus test by which a company’s social and environmental impact is defined, reported, and assessed. The third party standard is an independent standard that vows to be comprehensive, independent, and credible – in addition to being transparent.
A look at three third party standards:
  • B Corporation – B Lab, the organization behind the B Corp standard, has proven a champion of third party business standards and state legislation.  Their Impact Assessment questionnaire provides the framework, and responses are then weighted to determine whether or not a company has the capacity and ability to be become certified as a B Corp
  • ULE 880 – This manufacturer standard has a rigorous 1000-point scoring system and looks comprehensively across company governance and the web of relationships between suppliers, customers, employees, and the natural world.  The prerequisites approach is reminiscent of LEED rating systems, and should feel comfortable to those who have worked with green building certification.  For the service sector, the ULE 881 standard is said to be underway. TriplePundit reviewed the standard in it’s infancy.
  • GreenSeal – Less known than its product standards is the fact that GreenSeal has a standard for product manufacturers themselves.  ‘GS-C1′ features a Bronze/Silver/Gold certfication structure and clear requirements for policies and actions across an array of CSR issues.  It puts teeth behind a GRI-like framework.
As we look to 2012, a review of 2011 through a social innovation lens will definitely show major legislation and policy changes aimed to support and encourage social innovation.

Sometimes 6 + 1 is greater than 7
Perhaps chief among them is the benefit corporation movement. Six states joined Maryland in passing benefit corporation legislation in 2011 to make a total of 7 states with new for-profit corporate forms that shift focus from maximizing shareholder wealth to creating a material positive impact on society and the environment.
Notably, the last two states that have passed benefit corporation legislation represent the 1st and 3rd most populous states in the country. Thus the passage of the bills represents support from broad, expansive constituencies.
Specifically, New York was the most recent to join the benefit corporation club whose members already include California, Hawaii, New Jersey, Virginia, Vermont, and Maryland.
Articles and Posts about New York’s New Benefit Corporation Legislation
Since the passage of New York’s bill on Monday, there have been a number of articles and posts about the new legislation. Here’s a compiled list of where to learn more about the New York benefit corporation law:
  1. Squadron-Silver Bill to Bring Benefit Corporations to New York Becomes Law (
  2. New York State Senate and Assembly Pass Benefit Corporation Legislation (Buffalo Rising)
  3. Will Benefit Corporations Change the Way NYC Does Big Business? (
  4. Why New York Just Became a Better State for Businesses (Forbes)
  5. This Just In…New York Passes Benefit Corporation Legislation (Innov8Social)
  6. Benefit corporations debut in the state (Westfair Online)
  7. NY Gets Friendlier to Socially Responsible Business (WNYC)
  8. New Legal Structures for ‘Social Entrepreneurs’ (Wall Street Journal) –> read the comments for more info
  9. NY Law Creates New Kind of Corporation (CSR Wire)
  10. Cuomo signs legislation allowing benefit corporations (Rochester Business Journal)
  11. NY law establishes benefit corporations (Wall Street Journal)
  12. Occupying the Future: Benefit Corporations now opening shop in NY, six other states (Daily Kos)
  13. New York Unanimously Passes Benefit Corporation Bill (socentlaw)
  14. Keepin’ it Local – Help Push for Benefit Corporations in New York (The Good Neighborhood)
brooklyn bridge sign, new yorkThis just in, the 2 houses of the New York state legislature (House and Assembly) passed benefit corporation legislation with a final vote of 892 ayes and 62 nays at midnight on December 12, 2011.

New York Passes Benefit Corporation Legislation
This makes New York the 7th state to pass benefit corporation legislation (read about the other six states here). This continues the momentum of the benefit corporation movement which most recently saw the passage of similar legislation in California in October 2011. As the third most populous state in the country, New York’s passage of the bill with strong bi-partisan support underscores the shift in the way consumers, companies, the legislatures envision the future and potential of business to do well by doing good.

Benefit corporations create a new corporate form of business, one which is for-profit while also creating a material positive impact on society and the environment. It is a more holistic approach to business—seeing business as part of a broader ecosystem.
While traditional corporations seek to maximize shareholder profit, benefit corporations shift the focus to maximization of stakeholder benefit. Stakeholders, in this context, include environment, society, as well as shareholders.
Comments and Quotes on Passage of Benefit Corporations in New York
B Lab has released a few quotes of those who worked closely in the passage of this legislation, including these:
“Political leaders like Speaker Silver, and Senators Squadron and Larkin understand that New York needs to attract businesses whose core purpose is to create more high quality jobs and to improve the quality of life in communities across the state,” said Andrew Kassoy, co founder of B Lab, the nonprofit organization that drafted the model legislation. “The benefit corporation bill will unlock billions of dollars in impact investment capital and enable entrepreneurs across the state to start businesses that solve some of society’s greatest challenges.”
“Benefit corporations will mean New York is open for business in an important new way. Benefit corporations will unlock billions of dollars in new investments in New York while empowering companies to do well and do good,” said Senator Squadron. “By offering this opportunity to entrepreneurs and investors, New York will bring new businesses into the state, new investors into the market and a new socially-minded approach for our entrepreneurs.”
“The passage of benefit corporation legislation is an important and much needed step forward to grow our New York state economy and create more jobs which can also provide greater social and environmental benefit,” says David Levine, co-founder of the American Sustainable Business Council whose members’ organizations represent over 100,000 businesses. “At a time when the country is looking for solutions to build the economy, New York is helping to lead the way with an innovative and sustainable business strategy.”
The movement to create new legal structure for social business called benefit corporation, took a definitive step forward in April 2010, when the first state passed the legislation.To Pass State LawPassing a bill requires no small amount of work.  A bill must be drafted with consideration of existing corporate codes and state law infrastructure, and it must be sponsored by a state legislator(s). Support for the new law must be established by affected constituents such as state and local business, entrepreneurs, and other state actors. The bill must be persuasive, relevant, and must address an unmet need. The bill must be presented in and voted on by various committees and representatives of state assemblies, and state senates.

And, if that process wasn’t involved enough, each state differs in its rules and process of how a bill is passed.

So it is noteworthy that benefit corporations did not only become law in a single state. The legislation has gone on to be introduced in various states, and has recently been passed in another 5 states. And similar legislation is being introduced in various other states.

So which states were first on the scene for benefit corporation?

6 in black, white, silver
6 States That Have Passed Benefit Corporation Legislation

  1. Maryland passed SB690/HB1009 in April 2010.
  2. Vermont passed S.263 in May 2010.
  3. Virginia passed HB2358 in March 2011.
  4. New Jersey passed S2170 in March 2011.
  5. Hawaii passed SB298 in July 2011.
  6. California passed AB361 in October 2011.
Read the text of the bills, find out about the legislative sponsors, and follow links to press coverage of the benefit corporation bills on B Lab’s Public Policy page.

California Governor Jerry Brown signed 2 bills that create new legal structures for social entrepreneurs, at the eleventh hour on Sunday, October 9th, 2011.With a few days for the blogosphere and twitterverse to react and inform, here’s a list of blog posts and resources about the new social innovation legislation.(Note: feel free to add on […]

With the midnight passage of AB 361 (benefit corporations) and SB 201 (flexible purpose corporations) you can imagine that the social media is abuzz with the news.(Learn more about the passage of AB 361 and SB 201, and learn about the key points of both the bills)Here’s what we’ve heard

“Entrepreneurs, investors and consumers are calling for this type of legislation,” said Assemblymember Huffman. “They believe this is the start of something transformational. AB 361 rolls out the welcome mat for businesses and investors ready to create high quality jobs in California and make economic and social contributions that will improve the quality of life in communities across to our state for years to come,” said Assemblymember Jared Huffman (sponsor of AB 361)

Twitter Bird logo
JaredHuffman Jared Huffman
Just before midnight @JerryBrownGov signed my benefit corporation bill AB 361! CA now on cutting edge of corporate social responsibility!marc_thibault Marc Thibault
Gov Brown signs into law #BenefitCorp Legislation #AB361. Thx@Jared Huffman, @ASBCouncil, @BCorporation 4ur leadership.
rtjohnson R. Todd Johnson
#CA becomes the first State to offer #socent a choice. Brown signs Flexible Purpose and Benefit Corporation
GTak Gene Takagi
California becomes leader in innovation in corporate forms for social entrepreneurs… – great move, Governor!
OmidyarNetwork Omidyar Network
Great news! @JerryBrownGov signed Flexible Purpose Corp & #BenefitCorp #Legislation into law! #BCorp #socent #impinv
GreenBizConsult Carolina Miranda
California passes #bcorp and green business legislation! William James Fnd
Go MoonBeam! Gov. Jerry Brown signs AB 361, for CA Benefit Corps. Moving forward……
vgiveadamn Give a Damn
Social Innovation Bills in CA signed by Governor Jerry Brown! #socent #CA #vgiveadamnTheHubLA The HUB LA
Social Innovation Bills in CA signed by Governor Jerry Brown! #socent #CAArthurSmid Arthur Smid
California at forefront of progressive legislation: Bill AB 361 – Benefit corporations. Brown signed B corps into law…

Innov8Social Neetal Parekh
@JerryBrownGov signed Into CA Law: AB 361 (#BCorps) & SB 201 (Flexible Purpose Corps) @BCorporation #socent #socentlaw

Mixtape_Media MixtapeMedia
Yeah, Cali! RT @TheHubLA Social Innovation Bills in CA signed by Governor Jerry Brown! #socent #CA

InVentureFund InVenture Fund
#California recognizes #bcorps! @bcorporation

echoinggreen Echoing Green
.@JerryBrownGov signs Flexible Purpose Corp & #BCorps into law in #California! Great news for #socialinnovation! #socent

ABLImpact Antony Bugg-Levine
Huge achievement for @BCorporation: @JerryBrownGov signed #BenefitCorp #Legislation into law! #BCorp #socent #impinv

ZambranoESQ Daniel S. Zambrano
Good news for #socialentreprenuers in #CA: “@BCorporation:@JerryBrownGov signed #BenefitCorp #Legislation! #BCorp

shawnlandres Shawn Landres
Great news: @JerryBrownGov has signed Flexible Purpose Corps & #BCorps into law! @BCorporation #socent #impinv #socentlaw

CultivatingCap Cultivating Capital
Great news: Governor Brown signed Benefit Corporation and Green Business legislation!

CauseWire Mickie Kennedy
California Benefit Corporation and Flexible Purpose Corporation: California Governor Jerry Brown anno… #nonprofit

greenchamber Green Chamber
California Passes Benefit Corporation and Green Business via@CultivatingCap

EucalyptusMag Eucalyptus Magazine
New legislation in CA.

lornali Lorna Li Social SEO
RT @TheHubLA – Social Innovation Bills in CA signed by Governor Jerry Brown! _#socent_ #CA

BCorporation B Corporation
Great news: @JerryBrownGov has signed #BenefitCorp #Legislation into law! #BCorp #CA #news#socent #impinv #socentlaw

Assemblymember Jared Huffman issued an official press release this morning, following the approval of AB 361 (benefit corporations) legislation by the Governor just before the midnight deadline last night.You can also read more about the process and passage of AB 361 here.AB 361 Signed Into Law

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California Capitol Building ceilingIn reviewing the last batch of the nearly 600 bills that he had to process, California Governor Jerry Brown signed into law both social innovation bills—just in time for the midnight deadline on October 10th, 2011.Both AB 361 (benefit corporations) and SB 201 (flexible purpose corporations) which create new legal structures for social enterprise are now officially California law.You can read the key points of each bill here.Read the official legislative update from the Governor’s office here.

California is #6

The passage of the benefit corporation legislation makes California the 6th state to recognize a new form of corporation that is for-profit and committed to creating a positive impact on society and the environment. California joins Maryland, Vermont, Hawaii, Virginia, and New Jersey in the benefit corporation club.

A Look Back

If you have been following the benefit corporation legislation movement on the B Corporation public policy page, here on Innov8Social, or on any number of sites following the developments, you may have been awaiting the midnight decision.

You can catch up on the progress of AB 361 in California:

A Look Ahead
Non-urgent bills such AB 361 and SB 201 signed into law will become effective January 1st, 2012. Until then, social entrepreneurs interested in becoming among the first benefit corporations in California, can use the time to decide which legal structure is the best fit, and become prepared to meet the various requirements.
Attorney Donald Simon shares some tips on how a company can get ready for benefit corporation certification or re-certification as a benefit corporation in these two videos:

Attorney Donald Simon Defines 3 Terms Related to AB 361 (Benefit Corporations) [VIDEO]

Attorney Donald Simon’s Q & A on California Benefit Corporation Legislation [VIDEO]



There is unique fame and distinction in being the first. In the Olympics it can win you gold. In the marketing world, it can give you first mover advantage. And in law it can help you set precedent.

Maryland can tap into these sentiments when telling the story of benefit corporation legislation. That’s because on April 13, 2010, Governor Martin O’Malley made Maryland the first state to legally recognize benefit corporations, when he signed Senate Bill 690 into law.

(A quick refrain, benefit corporation legislation creates a new form of corporation. One that is for-profit and that aims to create material positive impact on society and the environment. It is different from “B corporation”, which is a voluntary certification. More here.)

6 Interesting Provisions of Maryland’s SB 690, Creating Benefit Corporations

Here is a look at how Maryland has structured its benefit corporation bill, SB 690, which became effective law on October 1, 2010. It closely follows the model legislation prepared drafted by Drinker Biddle & Reath.

(Read the full text of Maryland’s benefit corporation bill here)

1. Defining a Benefit Corporation:
Paraphrased from Section  5–6C–06: Every benefit corporation shall have the purpose of creating general public benefit. Benefit corporations may additionally identify one or more specific public benefits.

Specific public benefits include (paraphrased from Section  5–6C–01):

  • providing beneficial products/services to individuals or communities;
  • promoting economic opportunity, beyond job creation, for individuals or communities;
  • preserving the environment;
  • improving public health;
  • promoting arts, science, or advancement of knowledge;
  • or any other particular benefit for society or the environment.

From Section  5–6C–01: “General public benefit” means a material positive impact on society and the environment, as measured by a third-party standard, through activities that promote a combination of specific public benefits.

2. Requirements
Paraphrased from Section 5-6C-05:  Companies that choose to incorporate as benefit corporations must make clear reference to their benefit corporation status by:

  • announcing the corporation is a benefit corporation at the head of the charter (and at the head of each subsequent charter); and on each outstanding stock certificate
  • approval by stockholders according to Maryland Corporations Code (Title 2, Subtitle 6). Note Section 2-604 requires 2/3 vote where there are stockholders.

3. Transitioning Corporations
Paraphrased from  5–6C–03: A corporation may elect to become a benefit corporation by amending or including in the charter of incorporation a statement that the corporation is a “benefit corporation.”

 Additionally, the required vote from stockholders is also required (Section 2-604 of Maryland Corporations Code).

4. Board of Directors Decisionmaking
Paraphrased from  5–6C–07: A Director of a benefit corporation should consider the effects of any decision to act or not to act based on:

  • shareholders of the benefit corporation
  • employees and workforce of the benefit corporation
  • customers as beneficiaries of the general or specific public benefit of the benefit corporation;
  • community and society;
  • local and global environment; and
  • any other pertinent factors or interest of any other group that the Director determines are appropriate to consider

5. Transparency
Paraphrased from 5–6C–08: Benefit corporations shall deliver an annual benefit report to each stockholder  within 120 days of the end of the fiscal year. The benefit report shall include:

  • description of how the benefit corporation has pursued the general public benefit, and the extent to which the general public benefit was created;
  • ways in which specific public benefit was created; and
  • any circumstances that have hindered creation of the public benefit; and
  • assessment of societal and environmental performance of the benefit corporation, consistent with a third-party standard;

The benefit report shall be posted publicly on the company’s website.

6. Termination
Paraphrased from Section  5–6C–04: A corporation may terminate its benefit corporation status by amending its articles of incorporation charter (i.e. deleting the statement that the corporation is a benefit corporation.”

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