By Rawan Bitar
Business organizations can now convert, merge, or form as a “benefit corporation” or a “social purpose corporation.”
The Florida Bar’s Business Law Section was heavily involved in the passage of this law during the recently completed legislative session.
The two new forms of enterprise will appeal to a growing number of entrepreneurs who wish to promote social good through their organizations while accruing profit.
Business Law Section members Stuart R. Cohn of Gainesville and Stuart Ames of Miami were principal draftsman for the bill, which went into effect July 1 and falls under F.S. Ch. 607.
“It is very difficult to get business legislation passed in Florida without a great deal of effort,” Cohn said.
BLS worked closely with bill sponsors Sen. Jeff Clemens, D-Lake Worth, and Rep. Pat Rooney, R-Palm Beach Gardens.
“Around the country right now, there is a growing movement towards what are called socially responsible corporations,” said Cohn. “They want to engage in some kind of public benefit activities to a greater extent than what might be permitted by law for traditional corporations.”
Benefit corporations are those that have broad public benefit purposes. The officers and directors are mandated to consider how their decisions will impact major societal and environmental concerns.
Social purpose corporations are those that have one or two narrower public benefit goals. For instance, the owner of such an enterprise may wish to focus on the literacy levels of students in a certain county or community.
Directors of both types of corporations must file an annual report with their shareholders and post it on their website for accountability purposes. The report must indicate what attempts have been made toward public benefits or why those goals have not been met.
Cohn credited the members of the Corporation, Securities and Financial Services Committee for helping redo the bill and the lobbyists for the Business Law Section for getting it through the legislative committees to the House of Representatives.
Florida is unique in that California and Minnesota are the only other states that have these two kinds of corporations.
Supporters of this new law hope the flexible corporate designation options will attract charitable growth, business establishment, and greater investment in Florida.