Laws Signed in California that Create “Benefit Corporations” and “Flexible Purpose Corporations” (Guest Article)

Editor's Note: This is a guest article by Neetal Parekh, founder of Innov8Social, which covers topics in social innovation.  The following is adapted from an article originally published on Innov8Social.


California Governor Jerry Brown recently signed into law AB 361 (benefit corporations) and SB 201 (flexible purpose corporations) which create new legal structures for social enterprises.  You can read the key points of each bill here and the official legislative update from the Governor's office here.

California is #6

The passage of the benefit corporation legislation makes California the 6th state to recognize a new form of corporation that is for-profit and committed to creating a positive impact on society and the environment. California joins Maryland, Vermont, Hawaii, Virginia, and New Jersey in the benefit corporation club.

A Look Back

If you have been following the benefit corporation legislation movement on the B Corporation public policy page, on Innov8Social, or on any number of sites following the developments, you may have been awaiting the midnight decision.

You can catch up on the progress of AB 361 in California:

A Look Ahead

Non-urgent bills such AB 361 and SB 201 signed into law will become effective January 1st, 2012. Until then, social entrepreneurs interested in becoming among the first benefit corporations in California, can use the time to decide which legal structure is the best fit, and become prepared to meet the various requirements. Attorney Donald Simon shares some tips on how a company can get ready for benefit corporation certification or re-certification as a benefit corporation in these two videos:

Attorney Donald Simon Defines 3 Terms Related to AB 361 (Benefit Corporations) 

Donald Simon's Q & A on California Benefit Corporation Legislation