HB331 Alabama 2013 Session

Summary

Primary Sponsor

Bill Poole

Republican

Session

Regular Session 2013

Title

Corporations, definition, authorization and regulation of a benefit corporation

Summary

HB331 would create a new Alabama corporate form called a benefit corporation, allowing conversion from existing corporations and setting governance and reporting rules to pursue general and specific public benefits.

What This Bill Does

It authorizes the formation of benefit corporations and allows existing corporations to convert by amending their charter, requiring a minimum status vote for effectiveness. It requires directors and officers to consider broad stakeholder interests (like employees, customers, communities, and the environment) in decision-making and may establish a benefit director for publicly traded benefit corporations. It mandates an annual benefit report assessing public-benefit performance against a third-party standard, which must be posted publicly and filed with the Secretary of State for a fee; enforcement can occur only through benefit enforcement proceedings.

Who It Affects

• Existing and prospective Alabama corporations that may form or convert to a benefit corporation, and their boards, who must meet new governance requirements and potential reporting obligations.
• Shareholders and the general public, who will receive annual benefit reports, have visibility into the corporation's public-benefit performance, and may be involved in enforcement proceedings related to the corporation's duties under the act.

Key Provisions

• Authorizes and regulates benefit corporations; the act controls conflicting provisions with the Alabama Business Corporation Law and may run concurrently with other statutes.
• Defines key terms: benefit corporation, benefit director, benefit enforcement proceeding, general public benefit, specific public benefit, independent, minimum status vote, publicly traded, and third-party standard.
• Formation and conversion: a benefit corporation must be incorporated with a certificate stating its status; existing corporations can become benefit corporations by amending their certificate, effective only after the minimum status vote; mergers involving a benefit corporation require the minimum status vote to be effective.
• Termination: a corporation may terminate its status by amending its articles, or a plan involving termination via merger/consolidation/shares requires the minimum status vote.
• Purpose: every benefit corporation must pursue general public benefit and may identify one or more specific public benefits; creation of both is encouraged and amendments to add/delete benefits require the minimum status vote.
• Governance: directors and officers must consider shareholders, employees, customers, communities, the environment, and long-term interests; an independent benefit director (and public benefit officer where applicable) has specified roles and protections; the board may designate alternative arrangements under the bylaws.
• Benefit director: required for publicly traded benefit corporations; must be independent (with certain exceptions) and prepare annual statements on conformity with public-benefit purposes; may also serve as benefit officer.
• Officers: must consider the same interests as directors; may receive liability protections for acts complying with the act; the benefit officer (if present) handles certain management duties and reports.
• Enforcement: duties of directors and officers can be enforced only through benefit enforcement proceedings, with standing defined for direct holders, certain directors, and larger equity holders.
• Benefit report and filing: annual report to shareholders describing general and specific benefits and third-party assessment; must include names and addresses of key officers/director, compensation, and the benefit director’s statement; report is due within 120 days of year-end, posted on the company website, and filed with the Secretary of State for a $70 filing fee.
• Effective date: the act becomes law on the first day of the third month after passage and governor approval.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Corporations