California Governor Brown signed into law AB 361, which allow companies to become a benefit corporation if part of its mission is to improve society and the environment, and the corporation creates a “general public benefit” or “material positive impact on society and the environment.” The governor also signed into law SB 201, which creates flexible purpose corporations. SB 201 authorizes “a flexible purpose corporation to convert into a nonprofit corporation, a corporation, or a domestic other business entity, upon satisfaction of equivalent conditions.” The governor chose to sign these bills into law rather than veto them as the October 9th deadline approached.
According to advocates of the proposed legislation, the new corporate entity is necessary because "the legal issue of fiduciary responsibility has long been used as a barrier by companies who prefer or are deterred from taking proactive social and environmental steps. In many cases, this law regarding fiduciary responsibility has given companies legal cover to avoid substantive action to clean up pollution, adopt greener chemicals or avoid sweatshop sourcing."
The bills do not address the tax treatment of a benefit corporation so we assume the new entity would be treated like a regular corporation for tax purposes. In the future the government may begin to provide tax incentives for these types of corporations. For more information on this bill, you can read our previous entry on the pieces of legislation.