Senators gave first-round approval March 12 to a bill that would allow a business corporation to become a benefit corporation.
Lincoln Sen. Danielle Conrad introduced LB751, which would allow a business corporation to become a benefit corporation by a two-thirds vote of each class of shareholders. Conrad said the bill would offer social entrepreneurs an additional tool without giving preferential treatment.
“Electing to become a benefit corporation won’t be a good fit for all businesses,” she said, “but for businesses who seek to attract socially conscious investors and consumers, it will be.”
The bill defines a benefit corporation as a domestic business corporation that would create a general public benefit, including:
• providing low-income or underserved individuals with benefit products or services;
• promoting economic opportunity for individuals in communities beyond creation of jobs in normal courses of business;
• protecting or restoring the environment;
• improving public health;
• promoting the arts, sciences or advancement of knowledge;
• increasing the flow of capital to entities with a purpose to benefit society or the environment; and
• conferring any other particular benefit on society or the environment.
Under LB751, the benefit director would be required to submit an annual report to shareholders explaining whether or not the corporation’s actions were in accordance with its stated public benefit purposes. The annual report also would detail the impact of its actions on shareholders, employees, customers, the community and the ability of the corporation to achieve its general public benefit purpose.
Columbus Sen. Paul Schumacher supported the bill, saying it would provide a valuable marketing tool for no cost to the taxpayers.
“This bill makes that corporate organization — at no cost to anybody — available to entrepreneurs who agree with the notion that socially conscious corporations … are a way to be highly profitable,” he said. “It would marry the notion of capitalistic greed and entrepreneurship with the notion of social consciousness.”
Senators advanced the bill on a 33-0 vote.