Corporation Law Committee Provides Guidance on "Benefit Corporation" Legislation

The end of the legislative session in Albany typically brings a flurry of fast-paced activity and negotiations. In fact, 77% of all two-house bills that passed the legislature last session passed in June, the last month of session. With impending deadlines and a crushing number of bills being introduced and advanced, the opportunity for public input can be diminished. This was the backdrop to the introduction of A.11498-B/S.7855-B, which allows for the incorporation of “benefit corporations” in New York that would be authorized to promote a “general public benefit.” Under this legislation, directors of a corporation designating itself as a benefit corporation would be required to consider the impact of their decision-making on stockholders, employees, customers, the environment and the community at large. When asked by one of the sponsors of the bill whether the City Bar could provide comments on the bill, the Legislative Affairs Department turned to the Corporation Law Committee. The Committee responded in full, participating in discussions with the sponsor’s office and following up with a letter recommending changes to the bill. Speaking about the Committee’s involvement, Nancy Sanborn, Chair of the Corporation Law Committee, said, “We were happy to get involved and make our voices heard. Our main goal was to point out some deficiencies of the bill and provide guidance as to how to improve it and avoid unintended consequences. We are hopeful that our comments will be taken into account if the bill is reintroduced in 2011.”

As seen in the November 8th edition of the 44th Street Notes