14A:18-1 Definitions relative to benefit corporations.

1. For purposes of this act:

"Benefit corporation" means a corporation organized under provisions of the "New Jersey Business Corporation Act," N.J.S.14A:1-1 et seq., that has elected to become subject to this act and whose status as a benefit corporation has not been terminated as provided in this act.

"Benefit director" means the director designated as the benefit director of a benefit corporation as provided in section 7 of this act.

"Benefit enforcement proceeding" means a claim or action brought directly by a benefit corporation, or derivatively on behalf of a benefit corporation, against a director or officer for:

(1) Failure to pursue the general public benefit purpose of the benefit corporation or any specific public benefit purpose set forth in its certificate of incorporation; or

(2) Violation of a duty or standard of conduct under this act.

"Benefit officer" means the officer of a benefit corporation, if any, designated as the benefit officer as provided in section 9 of this act.

"General public benefit" means a material positive impact on society and the environment by the operations of a benefit corporation through activities that promote some combination of specific public benefits.

"Independent" means that a person has no material relationship with a benefit corporation or any of its subsidiaries (other than the relationship of serving as the benefit director or benefit officer), either directly or as a shareholder, partner, member or other owner or a director, officer or other manager of an entity that has a material relationship with the benefit corporation or any of its subsidiaries. A material relationship between an individual and a benefit corporation or any of its subsidiaries will be conclusively presumed to exist if:

(1) The person is, or has been within the last three years, an employee of the benefit corporation or any of its subsidiaries, other than as a benefit officer;

(2) An immediate family member of the person is, or has been within the last three years, an executive officer, other than a benefit officer, of the benefit corporation or any of its subsidiaries; or

(3) The person, or an entity of which the person is a director, officer or other manager or in which the person owns beneficially or of record 5% or more of the outstanding equity interests, owns beneficially or of record 5% or more of the outstanding shares of the benefit corporation.

A percentage of ownership in an entity shall be calculated as if all outstanding rights to acquire equity interests in the entity had been exercised.

"Minimum status vote" means that, in addition to any other approval or vote required by Title 14A of the New Jersey Statutes or the certificate of incorporation:

(1) The holders of shares of every class or series shall be entitled to vote on the corporate action regardless of any limitation stated in the certificate of incorporation on the voting rights of any class or series; and

(2) The corporate action must be approved by vote of the shareholders of each class or series entitled to cast at least two-thirds of the votes that all shareholders of the class or series are entitled to cast thereon.

"Specific public benefit" includes:

(1) Providing low-income 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) Preserving 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 public benefit purpose; and

(7) The accomplishment of any other particular benefit for society or the environment.

"Subsidiary" of a person means an entity in which the person owns beneficially or of record 50% or more of the outstanding equity interests. A percentage of ownership in an entity shall be calculated as if all outstanding rights to acquire equity interests in the entity had been exercised.

"Third-party standard" means a recognized standard for defining, reporting and assessing corporate social and environmental performance that is:

(1) Developed by a person that is independent of the benefit corporation; and

(2) Transparent because the following information about the standard is publicly available:

(a) the factors considered when measuring the performance of a business;

(b) the relative weightings of those factors; and

(c) the identity of the persons who developed and control changes to the standard and the process by which those changes are made.

L.2011, c.30, s.1.