SB1238 Summary

• Creates Arizona Revised Statutes Chapter 22 establishing a new "benefit corporation" business structure that pursues general public benefit and specific public benefit purposes in addition to shareholder profits.

• Requires benefit corporations to consider the interests of shareholders, employees, customers, communities, environment, and long-term sustainability when making decisions, with directors and officers protected from liability for failure to maximize profits if they follow the statutory standard of conduct.

• Mandates annual benefit reports assessing the corporation's social and environmental performance against third-party standards, distributed to shareholders and posted publicly within 120 days of fiscal year-end.

• Allows existing corporations to elect benefit corporation status or terminate it by supermajority (two-thirds) or minimum status vote, with shareholders entitled to dissent and seek payment of fair value for their shares.

• Establishes that benefit enforcement proceedings can only be brought directly by the corporation or derivatively by shareholders owning at least 2% of shares, directors, or holders of 5% or more of parent entity equity interests.