[Rev. 2/10/2015 4:04:43
PM--2014R2]
CHAPTER 78B - BENEFIT CORPORATIONS
GENERAL PROVISIONS
NRS 78B.010 Definitions.
NRS 78B.020 “Benefit
corporation” defined.
NRS 78B.030 “Benefit
enforcement proceeding” defined.
NRS 78B.040 “General
public benefit” defined.
NRS 78B.050 “Minimum
status vote” defined.
NRS 78B.060 “Specific
public benefit” defined.
NRS 78B.070 “Subsidiary”
defined.
NRS 78B.080 “Third-party
standard” defined.
NRS 78B.090 Applicability.
FORMATION; TERMINATION
NRS 78B.100 Filing
requirements; required provisions of articles of incorporation.
NRS 78B.110 Procedure
for existing corporation to become benefit corporation; procedure for merger,
conversion or exchange resulting in formation of benefit corporation.
NRS 78B.120 Termination
of status as benefit corporation; procedure for disposition of all or
substantially all of property of benefit corporation.
SHARES OF STOCK
NRS 78B.130 Required
statement on share certificates.
POWERS AND DUTIES
NRS 78B.140 Creation
of general and specific public benefits; required and optional provisions of
articles of incorporation.
NRS 78B.150 Directors:
Duties; liability.
NRS 78B.160 Officers:
Duties; liability.
NRS 78B.170 Annual
benefit report: Requirement; contents.
NRS 78B.180 Annual
benefit report: Preparation by board of directors; required statement by board
of directors.
CLAIMS AGAINST BENEFIT CORPORATIONS, DIRECTORS AND OFFICERS
NRS 78B.190 Actions
or claims against benefit corporations, directors or officers: Limitations;
benefit enforcement proceedings; award of attorney’s fees and expenses.
_________
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GENERAL PROVISIONS
NRS 78B.010 Definitions. As
used in this chapter, unless the context otherwise requires, the words and
terms defined in NRS 78B.020 to 78B.080, inclusive, have the meanings ascribed to
them in those sections.
(Added to NRS by 2013, 410)
NRS 78B.020 “Benefit corporation” defined. “Benefit
corporation” means a corporation organized under chapter
78 or 78A of NRS, NRS 81.010 to 81.160, inclusive, or chapter 89 of NRS that has elected to become
subject to this chapter and whose status as a benefit corporation has not been
terminated pursuant to this chapter.
(Added to NRS by 2013, 410)
NRS 78B.030 “Benefit enforcement proceeding” defined. “Benefit enforcement proceeding” means a claim
or action for:
1. Failure of a benefit corporation to
pursue the general public benefit purpose of the benefit corporation or any
specific public benefit purpose set forth in its articles of incorporation;
2. Violation of a duty or standard of
conduct imposed on a director or officer of a benefit corporation pursuant to
this chapter; or
3. Failure of a benefit corporation to
deliver or post on its Internet website an annual benefit report as required by
NRS 78B.170.
(Added to NRS by 2013, 410)
NRS 78B.040 “General public benefit” defined. “General
public benefit” means a material positive impact on society and the
environment, taken as a whole, as assessed against a third-party standard, from
the business and operations of a benefit corporation.
(Added to NRS by 2013, 411)
NRS 78B.050 “Minimum status vote” defined. “Minimum
status vote” means:
1. In the case of a corporation, in
addition to any other approval or vote required by chapter
78 or 78A of NRS, NRS 81.010 to 81.160, inclusive, or chapter 89 of NRS, whichever is applicable, by chapter 92A of NRS or by the articles of
incorporation, satisfaction of both of the following conditions:
(a) The shareholders of every class or series are
entitled to vote on the corporate action regardless of any limitation on the
voting rights of any class or series stated in the articles of incorporation or
bylaws.
(b) The corporate action must be approved by the
outstanding shares of each class or series by at least two-thirds of the votes,
or the greater vote if required by the articles of incorporation, that all
shareholders of the class or series are entitled to cast on that action.
2. In the case of a business entity
organized and existing under the laws of this State other than a corporation,
in addition to any other approval, vote or consent required by the laws of this
State that govern the internal affairs of the entity, by any provision of the
publicly filed record or document required to form the entity, or by any
agreement binding some or all of the holders of the equity interests in the
entity, satisfaction of both of the following conditions:
(a) The holders of every class or series of
interest in the entity that are entitled to receive a distribution of any kind
from the entity or partnership are entitled to vote on or consent to the action
regardless of any otherwise applicable limitation on the voting or consent
rights of any class or series.
(b) The action must be approved by the vote or
consent of the holders described in paragraph (a) by at least two-thirds of the
votes or consent of those holders, or the greater vote or consent if required by
the publicly filed record or document required to form the entity or
partnership or by any agreement binding those holders.
(Added to NRS by 2013, 411)
NRS 78B.060 “Specific public benefit” defined. “Specific
public benefit” includes, without limitation:
1. Providing low-income or underserved
individuals or communities with beneficial products or services;
2. Promoting economic opportunity for individuals
or communities beyond the creation of jobs in the normal course of business;
3. Protecting, preserving or restoring the
environment;
4. Improving human health;
5. Promoting the arts, sciences or
advancement of knowledge;
6. Increasing the flow of capital to
entities with a general public benefit purpose; and
7. The accomplishment of any other
particular benefit for society or the environment.
(Added to NRS by 2013, 411)
NRS 78B.070 “Subsidiary” defined. “Subsidiary”
means an entity in which a person owns beneficially or of record 50 percent or
more of the outstanding equity interests.
(Added to NRS by 2013, 411)
NRS 78B.080 “Third-party standard” defined. “Third-party
standard” means a standard for defining, reporting and assessing overall
corporate social and environmental performance:
1. That provides for a comprehensive
assessment of the impact of the benefit corporation and its operations upon the
considerations listed in paragraphs (b) to (e), inclusive, of subsection 1 of NRS 78B.150;
2. That is developed by an entity that:
(a) Has no material financial relationship with
the benefit corporation or a subsidiary of the benefit corporation;
(b) Is governed by a governing body of which not
more than one-third of the members are representatives of:
(1) Associations of businesses operating
in a specific industry whose members’ performances are measured by the
standard;
(2) Businesses from a specific industry or
an association of businesses in that industry; or
(3) Businesses whose performance is
assessed against that standard;
(c) Is not materially financed by an association
or business described in paragraph (b);
(d) Accesses necessary and appropriate expertise
to assess overall corporate social and environmental performance; and
(e) Uses a balanced, multistakeholder approach to
develop the standard, including, without limitation, a public comment period of
at least 30 days; and
3. About which the following information
is available to the public:
(a) The criteria considered when measuring the
overall social and environmental performance of a business;
(b) The relative weightings assigned to the
criteria described in paragraph (a);
(c) The identity of the directors, officers,
material owners and the governing body of the entity that developed, and
controls revisions to, the standard;
(d) The process for revising the standard and
changing the membership of the governing body that developed, and controls
revisions to, the standard; and
(e) An accounting of the sources of financial
support for the entity that developed, and controls revisions to, the standard
which provides sufficient detail to disclose any relationships that could
reasonably be considered to present a potential conflict of interest.
(Added to NRS by 2013, 412)
NRS 78B.090 Applicability.
1. This chapter is applicable to all
benefit corporations.
2. The provisions of this chapter do not
create any implication that a contrary or different rule of law is or would be
applicable to a corporation that is not a benefit corporation. The provisions
of this chapter do not affect any statute or rule of law that is or would be
applicable to a corporation that is not a benefit corporation.
3. The provisions of chapters 78 and 78A
of NRS, NRS 81.010 to 81.160, inclusive, and chapters 89 and 92A
of NRS apply to benefit corporations except where those provisions conflict or
are inconsistent with the provisions of this chapter. A benefit corporation may
be subject simultaneously to this chapter and chapter
78 or 78A of NRS, NRS 81.010 to 81.160, inclusive, or chapter 89 of NRS, as applicable.
4. A provision of the articles of
incorporation or bylaws of a benefit corporation may not limit, be inconsistent
with or supersede a provision of this chapter.
(Added to NRS by 2013, 412)
FORMATION; TERMINATION
NRS 78B.100 Filing requirements; required provisions of articles of
incorporation. A benefit
corporation must be formed in accordance with NRS 78.030 to 78.055, inclusive, except that the
articles of incorporation must:
1. State that the corporation is a benefit
corporation; and
2. Identify any specific public benefit
adopted by the corporation pursuant to NRS 78B.140.
(Added to NRS by 2013, 413)
NRS 78B.110 Procedure for existing corporation to become benefit
corporation; procedure for merger, conversion or exchange resulting in
formation of benefit corporation.
1. A domestic corporation may become a
benefit corporation under this chapter by amending its articles of
incorporation so that the articles of incorporation contain a statement that
the domestic corporation is a benefit corporation. The amendment must be
adopted by at least the minimum status vote. If the amendment is adopted, a
shareholder of the corporation may, by complying with the provisions of NRS 92A.300 to 92A.500, inclusive, require the
corporation to purchase at their market value the shares owned by the
shareholder which are dissenting shares in accordance with the procedures set
forth in NRS 92A.300 to 92A.500, inclusive, as if the adoption
of the amendment were an action to which those provisions were applicable.
2. If a corporation that is not a benefit
corporation is a constituent entity in a merger or is acquired in an exchange,
and the surviving entity in the merger is to be a benefit corporation or the
articles of incorporation of the acquired corporation are to be amended in the
exchange to provide that the acquired corporation will be a benefit
corporation, the merger or exchange, whichever is applicable, is not effective
unless the plan of merger or exchange, whichever is applicable, is approved by
the corporation by the minimum status vote.
3. If a domestic other business entity is
a constituent entity in a merger and the surviving entity in the merger is to
be a benefit corporation, the merger is not effective unless the plan of merger
is approved by the domestic other business entity by at least the minimum
status vote.
4. If a domestic other business entity is
the constituent entity in a conversion in which the resulting entity will be a
benefit corporation, the plan of conversion is not effective unless the
conversion is approved by the converting entity by at least the minimum status
vote.
5. As used in this section:
(a) “Constituent entity” has the meaning ascribed
to it in NRS 92A.015.
(b) “Domestic corporation” means a corporation
organized and existing under chapter 78, 78A or 89 of
NRS, or a nonprofit cooperative corporation organized pursuant to NRS 81.010 to 81.160, inclusive.
(c) “Domestic other business entity” means a
limited-liability company organized and existing under chapter 86 of NRS, a limited partnership
organized and existing under chapter 87A or
88 of NRS or a business trust organized and
existing under chapter 88A of NRS.
(d) “Exchange” has the meaning ascribed to it in NRS 92A.050.
(e) “Resulting entity” has the meaning ascribed
to it in NRS 92A.090.
(Added to NRS by 2013, 413)
NRS 78B.120 Termination of status as benefit corporation; procedure for
disposition of all or substantially all of property of benefit corporation.
1. A benefit corporation may terminate its
status as a benefit corporation and cease to be subject to this chapter by
amending its articles of incorporation to delete the statement in the articles
of incorporation that the corporation is a benefit corporation as required by NRS 78B.100 or 78B.110.
To be effective, the amendment must be adopted by at least the minimum status
vote.
2. If a benefit corporation is a
constituent entity in a merger, conversion or exchange and the effect of the
merger, conversion or exchange will terminate the status of the benefit
corporation as a benefit corporation, the plan of merger, conversion or exchange,
whichever is applicable, is not effective unless it is approved by at least the
minimum status vote.
3. If not made in the usual and regular
course of business, a sale, lease, exchange or other disposition of all or
substantially all of the property of a benefit corporation is not effective
unless it is approved by at least the minimum status vote.
4. As used in this section:
(a) “Constituent entity” has the meaning ascribed
to it in NRS 92A.015.
(b) “Exchange” has the meaning ascribed to it in NRS 92A.050.
(Added to NRS by 2013, 413)
SHARES OF STOCK
NRS 78B.130 Required statement on share certificates. In addition to any other statement required by
chapter 78 or 78A
of NRS, NRS 81.010 to 81.160, inclusive, or chapter 89 of NRS, each certificate representing
a share of a benefit corporation shall contain conspicuously on the face of the
certificate the following statement: “This entity is a benefit corporation.”
(Added to NRS by 2013, 418)
POWERS AND DUTIES
NRS 78B.140 Creation of general and specific public benefits; required and
optional provisions of articles of incorporation.
1. A benefit corporation shall have the
purpose of creating general public benefit. This purpose is in addition to, and
may be a limitation on, the corporation’s purpose under NRS 78.030 and any specific purpose set
forth in its articles of incorporation pursuant to NRS 78.037.
2. In addition to the provisions required
to be stated in the articles of incorporation pursuant to NRS 78.035, the articles of incorporation
of a benefit corporation must contain a statement that the corporation is a
benefit corporation. The articles of incorporation may identify the creation of
one or more specific public benefits as a purpose or as purposes of the benefit
corporation. The identification of any specific public benefit pursuant to this
subsection does not limit the obligation of the benefit corporation to create
general public benefit.
3. The creation of general and specific
public benefits as provided in subsections 1 and 2 is in the best interests of
the benefit corporation.
4. A professional corporation that is a
benefit corporation does not violate NRS
89.050 by providing the professional services for which it was incorporated
for the purpose of creating general public benefit or any specific public benefit.
5. A benefit corporation may amend its
articles of incorporation to add, amend or delete the identification of any
specific public benefit that must be the purpose of the benefit corporation to
create. To be effective, the amendment must be adopted by at least the minimum
status vote.
(Added to NRS by 2013, 414)
NRS 78B.150 Directors: Duties; liability.
1. In discharging the duties of their
respective positions, and in considering the best interests of the benefit
corporation, the board of directors, committees of the board of directors and
individual directors of a benefit corporation must consider the impacts of any
action or inaction upon:
(a) The shareholders of the benefit corporation.
(b) The employees and workforce of the benefit
corporation and its subsidiaries and suppliers.
(c) The interests of customers of the benefit
corporation as beneficiaries of the general public benefit purpose or any
specific public benefit purpose of the benefit corporation.
(d) Community and societal factors, including,
without limitation, factors in the community in which offices or facilities of
the benefit corporation or its subsidiaries or suppliers are located.
(e) The local and global environment.
(f) The short-term and long-term interests of the
benefit corporation, including, without limitation, benefits that may accrue to
the benefit corporation from its long-term plans and the possibility that those
interests may be best served by control of the benefit corporation remaining
unchanged.
(g) The ability of the benefit corporation to
accomplish its general public benefit purpose and any specific public benefit
purpose.
2. In discharging their respective duties,
the board of directors, committees of the board of directors and individual
directors of a benefit corporation may consider:
(a) The resources, intent and conduct, including,
without limitation, the past, stated and potential conduct, of any person
seeking to acquire control of the benefit corporation.
(b) Any other pertinent factors or the interests
of any other person or group.
3. In discharging their respective duties,
the board of directors, committees of the board of directors and individual
directors of a benefit corporation are not required to give priority to any
particular factor or the interests of any particular person or group referred
to in subsection 1 or 2 over any other factor or the interests of any other
person or group, unless the benefit corporation has stated its intention to
give priority to a specific public benefit purpose identified in the articles
of incorporation of the benefit corporation.
4. In performing his or her duties, a director
of a benefit corporation is entitled to rely on information, opinions, reports,
books of account or statements, including financial statements and other
financial data, that are prepared or presented by:
(a) One or more directors, officers or employees
of the benefit corporation reasonably believed to be reliable and competent in
the matters prepared or presented;
(b) Counsel, public accountants, financial
advisers, valuation advisers, investment bankers or other persons as to matters
reasonably believed to be within the preparer’s or presenter’s professional or
expert competence; or
(c) A committee on which the director does not
serve, established in accordance with NRS
78.125, as to matters within the committee’s designated authority and
matters on which the committee is reasonably believed to merit confidence,
Ê but a
director is not entitled to rely on such information, opinions, reports, books
of account or statements if the director has knowledge concerning the matter in
question that would cause reliance thereon to be unwarranted.
5. The consideration of interests and
factors in the manner required by this section does not constitute a violation
of NRS 78.138 or 78.139 and is in addition to the ability
of directors to consider the interests and factors set forth in NRS 78.138 and 78.139.
6. A director of a benefit corporation is
not liable for monetary damages for:
(a) Any action or inaction in the course of
performing the duties of a director under this section if the director
performed the duties of a director in compliance with this section and NRS 78.138 and 78.139.
(b) Failure of the benefit corporation to pursue
or create general public benefit or any specific public benefit identified in
the articles of incorporation of the benefit corporation pursuant to NRS 78B.140.
7. A director does not have a duty to a
person who is a beneficiary of the general public benefit purpose or any
specific public benefit purpose identified in the articles of incorporation of
the benefit corporation pursuant to NRS 78B.140
arising from the status of the person as a beneficiary.
8. In performing his or her duties, a
director of a benefit corporation has the benefit of the presumptions
established by subsection 3 of NRS 78.138.
(Added to NRS by 2013, 414)
NRS 78B.160 Officers: Duties; liability.
1. Each officer of a benefit corporation
shall consider the interests and factors described in NRS
78B.150 if:
(a) The officer has discretion to act with
respect to a matter; and
(b) It reasonably appears to the officer that the
matter may have a material effect on:
(1) The creation of general public benefit
or any specific public benefit identified in the articles of incorporation of
the benefit corporation pursuant to NRS 78B.140;
or
(2) Any of the interests or factors
described in subsections 2 and 3 of NRS 78B.150.
2. The consideration by an officer of a
benefit corporation of interests and factors in the manner described in
subsection 1 does not constitute a violation of the duties of the officer.
3. An officer is not liable for monetary
damages for:
(a) Any action or inaction as an officer in the
course of performing the duties of an officer under subsection 1 if the officer
performed the duties of his or her position in compliance with this section.
(b) Failure of the benefit corporation to pursue
or create general public benefit or any specific public benefit identified in
the articles of incorporation pursuant to NRS 78B.140.
4. An officer does not have a duty to a
person who is a beneficiary of the general public benefit purpose or any
specific public benefit purpose identified in the articles of incorporation of
the benefit corporation pursuant to NRS 78B.140
arising from the status of the person as a beneficiary.
5. In performing his or her duties, an
officer of a benefit corporation has the benefit of the presumptions
established by subsection 3 of NRS 78.138.
(Added to NRS by 2013, 416)
NRS 78B.170 Annual benefit report: Requirement; contents.
1. A benefit corporation shall deliver to
each shareholder an annual benefit report which includes the following:
(a) A narrative description of:
(1) The process and rationale for
selecting the third-party standard used to prepare the benefit report;
(2) The ways in which the benefit
corporation pursued general public benefit during the applicable year and the
extent to which that general public benefit was created;
(3) The ways in which the benefit
corporation pursued any specific public benefit identified in the articles of
incorporation of the benefit corporation pursuant to NRS
78B.140 and the extent to which that specific public benefit was created; and
(4) Any circumstances that have hindered
the creation by the benefit corporation of general public benefit or any
specific public benefit identified in the articles of incorporation of the
benefit corporation pursuant to NRS 78B.140.
(b) An assessment of the overall social and
environmental performance of the benefit corporation, prepared in accordance
with a third-party standard applied consistently with any application of that
standard in prior benefit reports or accompanied by an explanation of the
reasons for any inconsistent application. The assessment is not required to be
audited or certified by a third party.
(c) The statement required by NRS 78B.180.
(d) A statement of any connection between the
entity that established the third-party standard, or its directors, officers or
material owners, and the benefit corporation, or its directors, officers and
material owners, including, without limitation, any financial or governance
relationship that might materially affect the credibility of the objective
assessment of the third-party standard.
2. The annual benefit report required by
subsection 1 must be sent annually to each shareholder within 120 days
following the end of the fiscal year of the benefit corporation or at the same
time that the benefit corporation delivers any other annual report to its
shareholders.
3. A benefit corporation shall post all of
its annual benefit reports on the public portion of its Internet website, if
any, except that the compensation paid to directors and any financial or
proprietary information included in the annual benefit report may be omitted
from the annual benefit report posted on the Internet website.
4. If a benefit corporation does not have
an Internet website, the benefit corporation must provide a copy of its most
recent annual benefit report, without charge, to any person requesting a copy.
The benefit corporation may omit any proprietary or financial information,
including, without limitation, the compensation paid to directors, from the
copy of an annual benefit report that the corporation provides pursuant to this
subsection.
(Added to NRS by 2013, 417)
NRS 78B.180 Annual benefit report: Preparation by board of directors;
required statement by board of directors.
1. The board of directors of a benefit
corporation shall prepare and include in the annual benefit report to
shareholders required by NRS 78B.170 a statement
indicating whether, in the opinion of the board of directors, the benefit
corporation failed in any material respect to pursue its general public benefit
purpose and any specific public benefit purpose identified in the articles of
incorporation pursuant to NRS 78B.140 during the
period covered by the report.
2. If, in the opinion of the board of
directors, the benefit corporation failed to pursue its general public benefit
purpose or any specific public benefit purpose identified in the articles of
incorporation pursuant to NRS 78B.140, the
statement required by subsection 1 must include a description of the ways in
which the benefit corporation failed to pursue its general public benefit
purpose or any specific public benefit purpose.
(Added to NRS by 2013, 416)
CLAIMS AGAINST BENEFIT CORPORATIONS, DIRECTORS AND OFFICERS
NRS 78B.190 Actions or claims against benefit corporations, directors or
officers: Limitations; benefit enforcement proceedings; award of attorney’s
fees and expenses.
1. Except in a benefit enforcement proceeding,
no person may bring an action or assert a claim against a benefit corporation
or its directors or officers with respect to:
(a) Failure to pursue or create general public
benefit or any specific public benefit identified in the articles of incorporation
of a benefit corporation pursuant to NRS 78B.140;
or
(b) A violation of an obligation, duty or
standard of conduct under this chapter.
2. A benefit enforcement proceeding may be
commenced or maintained only:
(a) Directly by the benefit corporation; or
(b) Derivatively by:
(1) A shareholder who owned beneficially
or of record at least 2 percent of the total number of shares of a class or
series outstanding at the time of the act or omission complained of;
(2) A director;
(3) A person or group of persons that owns
beneficially or of record 5 percent or more of the equity interests in an
entity of which the benefit corporation is a subsidiary at the time of the act
or omission complained of; or
(4) Any other person authorized in the
articles of incorporation or bylaws of the benefit corporation to commence and
maintain a benefit enforcement proceeding.
3. A benefit corporation is not liable for
monetary damages under this chapter for any failure of the benefit corporation
to create general public benefit or any specific public benefit identified in
the articles of incorporation of the benefit corporation pursuant to NRS 78B.140.
4. If the court in a benefit enforcement
proceeding finds that a failure to comply with this chapter was without
justification, the court may award an amount sufficient to reimburse the
plaintiff for the reasonable expenses incurred by the plaintiff, including
attorney’s fees and expenses, in connection with the benefit enforcement
proceeding.
(Added to NRS by 2013, 417)
