HB 5490 Summary

• Establishes the "Connecticut Benefit Corporation Act" effective October 1, 2012, creating a new business entity type that pursues general public benefit and optional specific public benefits alongside traditional corporate purposes.

• Requires benefit corporations to have a stated purpose of creating general public benefit (material positive impact on society and environment assessed against third-party standards) and may identify specific public benefits such as serving underserved communities, promoting economic opportunity, environmental preservation, or advancing human health.

• Directors and officers of benefit corporations must consider effects on shareholders, employees, customers, communities, environment, and the corporation's ability to accomplish its public benefit purposes; directors are protected from liability for failure to achieve stated public benefits if they comply with fiduciary duties.

• Benefit corporations must prepare and annually distribute a benefit report to shareholders within 120 days of fiscal year-end, including narrative descriptions of public benefit pursuit, social and environmental performance assessment, compensation information, and major shareholders; reports must be posted publicly unless proprietary information is withheld.

• Conversion to or from benefit corporation status, mergers involving benefit corporations, and asset sales require approval by two-thirds vote of all shareholders regardless of voting class restrictions (minimum status vote); benefit enforcement proceedings can be brought by the corporation, shareholders, directors, or other specified parties.