(a) A corporation may become a benefit corporation under this part by amending the corporation’s articles so that the articles contain a statement that the corporation is a benefit corporation. The amendment shall not be effective unless it is adopted by at least the minimum status vote. If the amendment is adopted, a shareholder of the corporation may, by complying with Chapter 13 (commencing with Section 1300) of Division 1, require the corporation to purchase at their fair market value the shares owned by the shareholder which are dissenting shares as defined in subdivision (b) of Section 1300 in accordance with the procedures in that chapter, as if the adoption of the amendment were a reorganization to which that chapter applies.

(b) If a corporation that is not a benefit corporation is a constituent corporation in a merger reorganization or is the acquired corporation in an exchange reorganization, and the surviving corporation in the merger reorganization is to be a benefit corporation or the articles of the acquired corporation are to be amended in the exchange reorganization to provide that it will be a benefit corporation, then the reorganization shall not be effective unless the reorganization is approved by the corporation or domestic other business entity by at least the minimum status vote.

Terms Used In California Corporations Code 14603

  • Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
  • Benefit corporation: means a corporation organized under the General Corporation Law that has elected to become subject to this part and whose status as a benefit corporation has not been terminated as provided in this part. See California Corporations Code 14601
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
  • Minimum status vote: means that:

    California Corporations Code 14601

(c) If a domestic other business entity is a party to a merger reorganization and the surviving corporation in the reorganization is to be a benefit corporation, then the reorganization shall not be effective unless the reorganization is approved by the domestic other business entity by at least the minimum status vote.

(d) If a domestic other business entity is the converting entity (subdivision (d) of Section 1150) in a conversion in which the converted corporation (subdivision (a) of Section 1150) is a benefit corporation, the conversion shall not be effective unless the conversion is approved by the domestic other business entity by at least the minimum status vote.

(Added by Stats. 2011, Ch. 728, Sec. 1. (AB 361) Effective January 1, 2012.)

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