United States

California - Corporation Legal Requirement

Your company can meet the legal requirement for B Corp Certification by electing benefit corporation status, which is the best way to ensure that the values of your company are maintained over time. Benefit corporation is an opt-in legal status administered by the Secretary of State. Existing companies can elect to become benefit corporations by amending their governing documents. In some states, this amendment requires a 2/3 supermajority vote of all shareholders. The procedure for filing amendments with the state is identical to that followed for any other corporate structures with the addition of a statement that the company is a benefit corporation.

How to Become a California Benefit Corporation

Sample of Amended Articles

The state of California has both the Social Purpose Corporation (SPC) and benefit borporation legal structures. B Lab encourages corporations to adopt benefit corporation status to meet the legal requirement for Certification. While benefit corporation status is preferred, SPCs in California can meet the legal requirement by including additional language in their articles of incorporation designed to create broader stakeholder consideration within that legal structure. The specific language SPCs must include in their articles is listed below:

PURPOSE CLAUSE:

The purpose of the Company shall include creating a material positive impact on society and the environment, taken as a whole, from the business and operations of the Company

DIRECTORS CLAUSE:

In discharging the duties of their respective positions and in considering the best interests of the Company, the board of directors, committees of the board, and individual directors shall consider the effects of any action or inaction upon:

(i) the shareholders of the Company;

(ii) the employees and work force of the Company, its subsidiaries, and its suppliers;

(iii) the interests of its customers as beneficiaries of the purpose of the Company to have a material positive impact on society and the environment;

(iv) community and societal factors, including those of each community in which offices or facilities of the Company, its subsidiaries, or its suppliers are located;

(v) the local and global environment;

(vi) the short-term and long-term interests of the Company, including benefits that may accrue to the Company from its long-term plans and the possibility that these interests may be best served by the continued independence of the Company; and

(vii) the ability of the Company to create a material positive impact on society and the environment, taken as a whole.


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