In 2013, the Colorado General Assembly passed HB 13-1138 - Concerning Benefit Corporations, and, In Connection Therewith, Making an Appropriation. Governor Hickenlooper signed the bill into law on May 5, 2013, to be effective April 1, 2014. The bill creates a new category of business operation in Colorado – benefit corporations are designed as for-profit corporations that can elect to pursue a humanitarian interest without contraventing the shareholders’ stake in maximizing profits.
The Public Benefit Corporation Act (PBC Act) details requirements for corporations wishing to be considered “benefit corporations.” As defined in the PBC Act, “‘Public benefit’ means one or more positive effects or reduction of negative effects on one or more categories of persons, entities, communities, or interests other than shareholders in their capacities as shareholders, including effects of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific, or technological nature.” This broad definition allows corporations much leeway in determining the public benefits they will offer.
A feature of Colorado’s PBC Act that is not mirrored in most other states allowing benefit corporations is that the Colorado Public Benefit Corporation must state its public purpose with specificity. In the clip below, J. William Callison of Faegre Baker Daniels explains some of the requirements of the PBC Act, with an example of a specific benefit outlined. Also appearing in the video are Herrick K. Lidstone, Jr., of Burns Figa & Will, and Carla Hoke of the Colorado Secretary of State’s office.
The Colorado Public Benefit Corporation Act is legislation that every Colorado business law practitioner should become familiar with before its effective date of April 1, 2014. Click the links below to order the full homestudy.