S.F. _____ SUBCHAPTER I 1 PRELIMINARY PROVISIONS 2 Section 1. NEW SECTION . 490B.101 Short title. 3 This chapter shall be known and may be cited as the “Iowa 4 Benefit Corporation Act” . 5 Sec. 2. NEW SECTION . 490B.102 Definitions. 6 Except as otherwise provided in this chapter, or unless the 7 context otherwise requires, the words and phrases used in this 8 chapter shall have the same meaning as the words and phrases 9 used in chapter 490, including but not limited to the words 10 and phrases used in section 490.140. In addition, all of the 11 following shall apply: 12 1. “Benefit corporation” means a business corporation, if 13 all of the following apply: 14 a. It has elected to become subject to this chapter. 15 b. Its status as a benefit corporation has not been 16 terminated. 17 2. “Benefit director” means a director designated as 18 the benefit director of a benefit corporation under section 19 490B.302. 20 3. “Benefit enforcement proceeding” means a claim or action 21 relating to any of the following: 22 a. The failure of a benefit corporation to pursue or create 23 general public benefit or a specific public benefit set forth 24 in its articles of incorporation. 25 b. A violation of any obligation, duty, or standard of 26 conduct provided under this chapter. 27 4. “Benefit officer” means an individual designated as 28 the benefit officer of a benefit corporation under section 29 490B.304. 30 5. “Business corporation” means a corporation formed as a 31 domestic corporation under chapter 490. 32 6. “Entity” means a person formed under the laws of 33 this state including but not limited to a limited liability 34 company under chapter 489; a corporation under chapter 490; 35 -1- LSB 1253XC (1) 86 da/nh 1/ 17

S.F. _____ a nonprofit corporation under chapter 504; a partnership, 1 limited partnership, limited liability partnership, or limited 2 liability limited partnership under chapter 486A or 488; or a 3 cooperative association or other cooperative organized under 4 chapter 497, 498, 499, 501, or 501A. 5 7. “General public benefit” means a material positive impact 6 on society and the environment, taken as a whole, assessed 7 against a third-party standard, which results from the business 8 and operations of a benefit corporation. 9 8. “Independent” means having no material relationship 10 with a benefit corporation or a subsidiary of the benefit 11 corporation as provided in section 490B.304A. 12 9. “Minimum status vote” means any of the following: 13 a. In the case of a business corporation, in addition to any 14 other required approval or vote required under chapter 490, the 15 satisfaction of all of the following conditions: 16 (1) The shareholders of every class or series are 17 entitled to vote as a separate voting group on the corporate 18 action regardless of a limitation stated in the articles of 19 incorporation or bylaws regarding the voting rights of any 20 class or series. 21 (2) The corporate action is approved by vote of the 22 shareholders of each class or series entitled to cast at least 23 two-thirds of the votes that all shareholders of the class or 24 series are entitled to cast on the action. 25 b. In the case of an entity other than a business 26 corporation, in addition to any other required approval, vote, 27 or consent, the satisfaction of all the following conditions: 28 (1) The holders of every class or series of equity interest 29 in the entity that are entitled to receive a distribution of 30 any kind from the entity are entitled to vote on or consent to 31 the action regardless of any otherwise applicable limitation on 32 the voting or consent rights of any class or series. 33 (2) The action is approved by vote or consent of the 34 holders described in subparagraph (1) entitled to cast at least 35 -2- LSB 1253XC (1) 86 da/nh 2/ 17

S.F. _____ two-thirds of the votes or consents that all of those holders 1 are entitled to cast on the action. 2 10. “Specific public benefit” means any of the following: 3 a. Providing low-income or underserved individuals or 4 communities with beneficial products or services. 5 b. Promoting economic opportunity for individuals or 6 communities beyond the creation of jobs in the normal course 7 of business. 8 c. Protecting or restoring the environment. 9 d. Improving human health. 10 e. Promoting the arts, sciences, or advancement of 11 knowledge. 12 f. Increasing the flow of capital to entities with a purpose 13 to benefit society or the environment. 14 g. Conferring any other particular benefit on society or the 15 environment. 16 11. “Subsidiary” means, in relation to a person, an entity 17 in which the person holds beneficially or of record fifty 18 percent or more of the outstanding equity interests. 19 12. “Third-party standard” means a recognized standard 20 for defining, reporting, and assessing corporate social or 21 environmental performance that is all of the following: 22 a. Comprehensive because the standard assesses the effect of 23 the business and its operations upon the interests listed in 24 section 490B.301, subsection 1, paragraphs “b” through “e” . 25 b. Developed by an entity that is not controlled by the 26 benefit corporation. 27 c. Credible because the standard is developed by an entity 28 that meets all of the following conditions: 29 (1) Has access to necessary expertise to assess overall 30 corporate social or environmental performance. 31 (2) Uses a balanced multiple stakeholder approach to 32 develop the standard, including a reasonable public comment 33 period. 34 d. Transparent because the following information is made 35 -3- LSB 1253XC (1) 86 da/nh 3/ 17

S.F. _____ publicly available: 1 (1) A description of the standard that includes all of the 2 following: 3 (a) Criteria considered when measuring the overall social 4 or environmental performance of a business corporation. 5 (b) The relative weightings, if any, of the criteria 6 described in subparagraph division (a). 7 (2) A description of the development and revision of the 8 standard which includes all of the following: 9 (a) The identity of the directors, officers, material 10 owners, and the governing body of the entity that developed and 11 controls revisions to the standard. 12 (b) The process by which revisions to the standard and 13 changes to the membership of the governing body are made. 14 (c) An accounting of the revenue and sources of financial 15 support for the entity, with sufficient detail to disclose any 16 relationship that could reasonably be considered to present a 17 potential conflict of interest. 18 Sec. 3. NEW SECTION . 490B.103 Application and effect of 19 chapter. 20 1. This chapter applies to all benefit corporations. 21 2. The existence of a provision of this chapter shall not 22 of itself create an implication that a contrary or different 23 rule of law is applicable to a business corporation that is not 24 a benefit corporation. This chapter shall not affect a statute 25 or rule of law that is applicable to a business corporation 26 that is not a benefit corporation. 27 3. Chapter 490 shall be construed as part of this chapter 28 and shall apply to benefit corporations, including but not 29 limited to their formation or organization, reports, fees, 30 authority, powers, rights, and the regulation and conduct of 31 their affairs. 32 4. A benefit corporation may be subject simultaneously to 33 this chapter and one or more other chapters of this title, 34 including chapter 496C. In such event, the provisions of 35 -4- LSB 1253XC (1) 86 da/nh 4/ 17

S.F. _____ this chapter shall take precedence with respect to a benefit 1 corporation. 2 5. A provision of the articles of incorporation or bylaws of 3 a benefit corporation shall not limit, be inconsistent with, or 4 supersede a provision of this chapter. 5 Sec. 4. NEW SECTION . 490B.104 Incorporation of benefit 6 corporation. 7 A benefit corporation shall be incorporated in accordance 8 with chapter 490, division II. The articles of incorporation 9 of a benefit corporation must also state that it is a benefit 10 corporation. 11 Sec. 5. NEW SECTION . 490B.105 Election of benefit 12 corporation status. 13 1. An existing business corporation may become a benefit 14 corporation under this chapter by amending its articles of 15 incorporation so that the articles contain, in addition to 16 the requirements of chapter 490, division II, a statement 17 that the corporation is a benefit corporation. In order to 18 be effective, the amendment must be adopted by at least the 19 minimum status vote. 20 2. a. An entity that is not a benefit corporation may 21 become a benefit corporation pursuant to subsection 1 if all 22 of the following apply: 23 (1) The entity is one of the following: 24 (a) A party to a merger or conversion. 25 (b) An exchanging entity in a share exchange. 26 (2) The surviving, new, or resulting entity in the merger, 27 conversion, or share exchange is to be a benefit corporation. 28 b. In order to be effective, a plan of merger, conversion, 29 or share exchange subject to paragraph “a” must be adopted by at 30 least the minimum status vote. 31 Sec. 6. NEW SECTION . 490B.106 Termination of benefit 32 corporation status. 33 1. A benefit corporation may terminate its status as 34 such and cease to be subject to this chapter by amending its 35 -5- LSB 1253XC (1) 86 da/nh 5/ 17

S.F. _____ articles of incorporation to delete the provision required by 1 section 490B.104 or 490B.105 to be stated in the articles of a 2 benefit corporation. In order to be effective, the amendment 3 must be adopted by at least the minimum status vote. 4 2. If a plan of merger, conversion, or share exchange 5 would have the effect of terminating the status of a business 6 corporation as a benefit corporation, the plan must be adopted 7 by at least the minimum status vote in order to be effective. 8 Any sale, lease, exchange, or other disposition of all or 9 substantially all of the assets of a benefit corporation, 10 unless the transaction is in the usual and regular course of 11 business, shall not be effective unless the transaction is 12 approved by at least the minimum status vote. 13 SUBCHAPTER II 14 CORPORATE PURPOSES 15 Sec. 7. NEW SECTION . 490B.201 Corporate purposes. 16 1. A benefit corporation shall have a purpose of creating 17 general public benefit. This purpose is in addition to its 18 purpose under section 490.301. 19 2. The articles of incorporation of a benefit corporation 20 may identify one or more specific public benefits to be created 21 as a purpose in addition to any purpose provided in section 22 490.301 or subsection 1. The identification of a specific 23 public benefit under this subsection does not limit the 24 obligation of a benefit corporation under subsection 1. 25 3. The creation of general public benefit as described 26 in subsection 1 and a specific public benefit as described 27 in subsection 2 is in the best interests of the benefit 28 corporation. 29 4. A benefit corporation may amend its articles of 30 incorporation to add, amend, or delete the identification of a 31 specific public benefit that it is the purpose of the benefit 32 corporation to create. In order to be effective, the amendment 33 must be adopted by at least the minimum status vote. 34 5. A professional corporation that is a benefit corporation 35 -6- LSB 1253XC (1) 86 da/nh 6/ 17

S.F. _____ does not violate section 496C.4 by having the purpose to 1 create general public benefit as provided in subsection 1 or a 2 specific public benefit as provided in subsection 2. 3 SUBCHAPTER III 4 ACCOUNTABILITY 5 Sec. 8. NEW SECTION . 490B.301 Standard of conduct for 6 directors. 7 1. In discharging the duties of their respective positions 8 and in considering the best interests of the benefit 9 corporation, a benefit corporation’s board of directors, 10 committees, and individual directors shall consider the effects 11 of any action or inaction upon all of the following: 12 a. The shareholders of the benefit corporation. 13 b. The employees and workforce of the benefit corporation, 14 its subsidiaries, and its suppliers. 15 c. The interests of customers as beneficiaries of the 16 general public benefit or specific public benefit purpose of 17 the benefit corporation as provided in section 490B.201. 18 d. Community or societal factors, including those of 19 each community in which offices or facilities of the benefit 20 corporation, its subsidiaries, or its suppliers are located. 21 e. The local and global environment. 22 f. The short-term and long-term interests of the benefit 23 corporation, including but not limited to benefits that may 24 accrue to the benefit corporation from its long-term plans and 25 the possibility that these interests may be best served by the 26 continued independence of the benefit corporation. 27 g. The ability of the benefit corporation to create general 28 public benefit or any specific public benefit as provided in 29 section 490B.201. 30 2. In discharging the duties of their respective positions 31 and in considering the best interests of the benefit 32 corporation, a benefit corporation’s board of directors, 33 committees, and individual directors may consider any of the 34 following: 35 -7- LSB 1253XC (1) 86 da/nh 7/ 17

S.F. _____ a. The interests referred to in section 490.1108A. 1 b. Any other pertinent factor or the interest of any other 2 person or group of persons deemed appropriate. 3 3. In discharging the duties of their respective positions 4 and in considering the best interests of the benefit 5 corporation, a benefit corporation’s board of directors, 6 committees, and individual directors need not give priority to 7 the interest of a particular person referred to in subsection 1 8 or 2 over the interests of any other person unless the benefit 9 corporation’s articles of incorporation state the benefit 10 corporation’s intention to give priority to a certain interest 11 related to its creation of general public benefit or a specific 12 public benefit as provided in section 490B.201. 13 4. The consideration of an interest or factor in the manner 14 required by subsections 1 through 3 shall not constitute a 15 violation of section 490.830. 16 5. Except as provided in the articles of incorporation or 17 bylaws of a benefit corporation, a director is not personally 18 liable for monetary damages for any of the following: 19 a. An action or inaction in the course of performing the 20 duties of a director under subsections 1 through 3 if the 21 director performed the duties of office in compliance with this 22 section and section 490.830. 23 b. The failure of the benefit corporation to pursue or 24 create general public benefit or a specific public benefit as 25 provided in section 490B.201. 26 6. A director of a benefit corporation does not have a duty 27 to a person who is a beneficiary of the general public benefit 28 or a specific public benefit purpose of the benefit corporation 29 as provided in section 490B.201, arising from the status of the 30 person as a beneficiary. 31 7. A director of a benefit corporation who makes a business 32 judgment in good faith fulfills the duty under this section if 33 all of the following apply: 34 a. The director is not interested in the subject of the 35 -8- LSB 1253XC (1) 86 da/nh 8/ 17

S.F. _____ business judgment. 1 b. The director is informed with respect to the subject of 2 the business judgment to the extent the director reasonably 3 believes to be appropriate under the circumstances. 4 c. The director rationally believes that the business 5 judgment is in the best interests of the benefit corporation. 6 Sec. 9. NEW SECTION . 490B.302 Benefit director. 7 1. The board of directors of a benefit corporation that is 8 a publicly traded corporation shall, and the board of any other 9 benefit corporation may, include a director who is designated 10 the benefit director. Such director shall have, in addition 11 to the powers, duties, rights, and immunities of the other 12 directors of the benefit corporation, the powers, duties, 13 rights, and immunities provided in this subchapter. 14 2. a. A benefit director shall be elected, and may be 15 removed, in the manner provided by chapter 490, division 16 VIII, part A. The benefit director shall be an individual 17 who is independent. The benefit director may serve as the 18 benefit officer at the same time as serving as the benefit 19 director. The articles of incorporation or bylaws of a benefit 20 corporation may prescribe additional qualifications of the 21 benefit director not inconsistent with this paragraph. 22 b. Notwithstanding paragraph “a” , a benefit director of 23 a professional corporation subject to chapter 496C is not 24 required to be independent. 25 3. The benefit director shall prepare, and the benefit 26 corporation shall include in the annual benefit report to 27 shareholders required by section 490B.401, the opinion of the 28 benefit director regarding all of the following: 29 a. Whether the benefit corporation acted in accordance 30 with its general public benefit and any specific public 31 benefit purpose as provided in section 490B.201 in all material 32 respects during the period covered by the report. 33 b. Whether the directors and officers complied with section 34 490B.301, subsection 1, and section 490B.303, subsection 1, 35 -9- LSB 1253XC (1) 86 da/nh 9/ 17

S.F. _____ respectively. 1 c. If, in the opinion of the benefit director, the benefit 2 corporation’s directors or officers failed to comply with 3 paragraph “b” , a description of the ways in which the benefit 4 corporation’s directors or officers failed to comply. 5 4. An act or inaction of an individual in the capacity of a 6 benefit director shall constitute for all purposes an act or 7 inaction of that individual in the capacity of a director of 8 the benefit corporation. 9 5. Regardless of whether the articles of incorporation or 10 bylaws of a benefit corporation include a provision eliminating 11 or limiting the personal liability of a director authorized by 12 section 490.202, a benefit director is not personally liable 13 for an act or omission in the director’s capacity as a benefit 14 director unless the act or omission constitutes self-dealing, 15 willful misconduct, or a knowing violation of law. 16 Sec. 10. NEW SECTION . 490B.303 Standard of conduct for 17 officers. 18 1. Each officer of a benefit corporation shall consider the 19 interests and factors described in section 490B.301, subsection 20 1, in the manner provided in that subsection if all of the 21 following apply: 22 a. The officer has discretion to act with respect to a 23 matter. 24 b. It reasonably appears to the officer that the matter 25 may have a material effect on the creation by the benefit 26 corporation of general public benefit or a specific public 27 benefit as provided in section 490B.201. 28 2. The consideration of the best interests of the benefit 29 corporation in the manner described in subsection 1 shall not 30 constitute a violation of section 490.842. 31 3. Except as provided in the articles of incorporation or 32 bylaws of a benefit corporation, an officer is not personally 33 liable for monetary damages for any of the following: 34 a. An action or inaction as an officer in the course of 35 -10- LSB 1253XC (1) 86 da/nh 10/ 17

S.F. _____ performing the duties of an officer under subsection 1 if the 1 officer performed the duties of the position in compliance with 2 section 490.842 and this section. 3 b. The failure of the benefit corporation to pursue or 4 create general public benefit or a specific public benefit as 5 provided in section 490B.201. 6 4. An officer does not have a duty to a person who is a 7 beneficiary of the general public benefit or a specific public 8 benefit purpose of the benefit corporation, as provided in 9 section 490B.201, arising from the status of the person as a 10 beneficiary. 11 5. An officer who makes a business judgment in good faith 12 fulfills the duty under this section if all of the following 13 apply: 14 a. The officer is not interested in the subject of the 15 business judgment. 16 b. The officer is informed with respect to the subject of 17 the business judgment to the extent the officer reasonably 18 believes to be appropriate under the circumstances. 19 c. The officer rationally believes that the business 20 judgment is in the best interests of the benefit corporation. 21 Sec. 11. NEW SECTION . 490B.304 Benefit officer. 22 1. A benefit corporation may have an officer designated as 23 the benefit officer. 24 2. a. A benefit officer shall have the powers and duties 25 relating to the purpose of the corporation to create general 26 public benefit or a specific public benefit as provided in 27 section 490B.201, if authorized by any of the following: 28 (1) The articles of incorporation or bylaws of the benefit 29 corporation. 30 (2) Absent any controlling provisions in the articles 31 of incorporation or bylaws of the benefit corporation, by 32 resolution or order of the benefit corporation’s board of 33 directors. 34 b. A benefit officer shall have the duty to prepare the 35 -11- LSB 1253XC (1) 86 da/nh 11/ 17

S.F. _____ benefit report required by section 490B.401. 1 Sec. 12. NEW SECTION . 490B.304A Benefit officers and 2 directors —— criteria for independence. 3 1. Serving as a benefit director or benefit officer 4 shall not alone affect whether an individual is or is not 5 independent. 6 2. A material relationship between an individual and a 7 benefit corporation or any of its subsidiaries is conclusively 8 presumed to exist if any of the following apply: 9 a. The individual is, or has been within the last three 10 years, an employee other than a benefit officer of the benefit 11 corporation or a subsidiary. 12 b. An immediate family member of the individual is, or 13 has been within the last three years, an executive officer 14 other than a benefit officer of the benefit corporation or a 15 subsidiary. 16 c. There is beneficial or record ownership of five percent 17 or more of the outstanding shares of the benefit corporation, 18 calculated as if all outstanding rights to acquire equity 19 interests in the benefit corporation had been exercised, by any 20 of the following: 21 (1) The individual. 22 (2) An entity if any of the following apply: 23 (a) The individual is a director, an officer, or a manager 24 of the entity. 25 (b) The individual owns beneficially or of record five 26 percent or more of the entity’s outstanding equity interests, 27 calculated as if all outstanding rights to acquire equity 28 interests in the entity had been exercised. 29 Sec. 13. NEW SECTION . 490B.305 Right of action —— benefit 30 enforcement proceedings. 31 1. a. Except in a benefit enforcement proceeding, a person 32 shall not bring an action or assert a claim against a benefit 33 corporation or its directors or officers with respect to any 34 of the following: 35 -12- LSB 1253XC (1) 86 da/nh 12/ 17

S.F. _____ (1) The failure of the benefit corporation to pursue or 1 create general public benefit or a specific public benefit 2 as set forth in its articles of incorporation as provided in 3 section 490B.201. 4 (2) A violation of an obligation, duty, or standard of 5 conduct under this chapter. 6 b. A benefit corporation shall not be liable for monetary 7 damages under this chapter for any failure of the benefit 8 corporation to pursue or create general public benefit or a 9 specific public benefit as provided in section 490B.201. 10 2. A benefit enforcement proceeding may be commenced or 11 maintained only as follows: 12 a. Directly by the benefit corporation. 13 b. Derivatively, in accordance with chapter 490, division 14 VII, part D by any of the following: 15 (1) A person or group of persons that owns beneficially or 16 of record at least two percent of the total number of shares 17 of all classes and series outstanding on the date of the 18 complained of action or inaction. 19 (2) A director of the benefit corporation. 20 (3) A person or group of persons that owns beneficially 21 or of record five percent or more of the outstanding equity 22 interests in an entity of which the benefit corporation is a 23 subsidiary on the date of the complained of action or inaction. 24 (4) Any other person or group of persons as specified in the 25 articles of incorporation or bylaws of the benefit corporation. 26 3. For purposes of this section, a person is the beneficial 27 owner of shares or equity interests if the shares or equity 28 interests are held in a voting trust or by a nominee on behalf 29 of the beneficial owner. 30 SUBCHAPTER IV 31 TRANSPARENCY 32 Sec. 14. NEW SECTION . 490B.401 Preparation of annual 33 benefit report. 34 1. A benefit corporation shall prepare an annual benefit 35 -13- LSB 1253XC (1) 86 da/nh 13/ 17

S.F. _____ report which shall include at least all of the following: 1 a. A narrative description of all of the following: 2 (1) The ways in which the benefit corporation pursued or 3 created general public benefit. 4 (2) The ways in which the benefit corporation pursued 5 or created a specific public benefit, as provided in section 6 490B.201, to the extent that the specific public benefit is 7 stated in the benefit corporation’s articles of incorporation. 8 (3) Any circumstances that have hindered the pursuit or 9 creation of general public benefit or a specific public benefit 10 as provided in section 490B.201. 11 (4) The process and rationale for selecting or changing the 12 third-party standard used to prepare the benefit report. 13 b. An assessment of the overall social and environmental 14 performance of the benefit corporation against a third-party 15 standard that is all of the following: 16 (1) Applied consistently with any application of the 17 third-party standard in prior benefit reports. 18 (2) Accompanied by an explanation of the reasons for any of 19 the following: 20 (a) Inconsistent application. 21 (b) A change to the third-party standard from the standard 22 used in the immediately prior report. 23 c. The name of the benefit director and the benefit officer, 24 if any, and the address to which correspondence to each of them 25 may be directed. 26 d. The compensation paid by the benefit corporation, during 27 the year, to each director in the capacity of a director. 28 e. The opinion of the benefit director described in section 29 490B.302, subsection 3. 30 f. A statement of any connection between the organization 31 that established the third-party standard, or its directors, 32 officers, or any holder of five percent or more of the 33 governance interests in the organization, and the benefit 34 corporation or its directors, officers, or any holder of five 35 -14- LSB 1253XC (1) 86 da/nh 14/ 17

S.F. _____ percent or more of the outstanding shares of the benefit 1 corporation, including any financial or governance relationship 2 which might materially affect the credibility of the use of the 3 third-party standard. 4 2. If, during the year covered by a benefit report, 5 a benefit director resigned from or refused to stand for 6 reelection to the position of benefit director, or was removed 7 from the position of benefit director, and the benefit director 8 furnished the benefit corporation with written correspondence 9 concerning the circumstances surrounding the resignation, 10 refusal, or removal, the benefit report shall include that 11 correspondence as an exhibit. 12 3. Neither the benefit report nor the assessment of the 13 performance of the benefit corporation in the benefit report 14 required by subsection 1, paragraph “b” , is required to be 15 audited or certified by a third party. 16 Sec. 15. NEW SECTION . 490B.402 Availability of annual 17 benefit report —— filing —— fee. 18 1. A benefit corporation shall send its annual benefit 19 report to each shareholder on the earlier of any of the 20 following: 21 a. One hundred twenty days following the end of the fiscal 22 year of the benefit corporation. 23 b. The date that the benefit corporation delivers any other 24 annual report to its shareholders. 25 2. A benefit corporation shall post all of its benefit 26 reports on the public portion of its internet site, if any. 27 However, the compensation paid to directors and financial or 28 proprietary information included in a benefit report required 29 pursuant to section 490B.401 may be omitted from the benefit 30 reports as posted. 31 3. a. Concurrently with the delivery of the benefit report 32 to shareholders under subsection 1, the benefit corporation 33 shall deliver a copy of the benefit report to the secretary 34 of state for filing. However, the compensation paid to 35 -15- LSB 1253XC (1) 86 da/nh 15/ 17

S.F. _____ directors and financial or proprietary information included in 1 the benefit report may be omitted from the benefit report as 2 delivered to the secretary of state. 3 b. The secretary of state may impose and collect a fee of 4 not more than ten dollars for filing a benefit report. 5 EXPLANATION 6 The inclusion of this explanation does not constitute agreement with 7 the explanation’s substance by the members of the general assembly. 8 GENERAL. This bill allows a business corporation to 9 incorporate and operate as a benefit corporation, generally 10 subject to the Iowa business corporation Act (Code chapter 490) 11 except as provided in the bill’s new Code chapter (Code chapter 12 490B). 13 ELECTION TO ATTAIN OR TERMINATE BENEFIT CORPORATION STATUS. 14 The bill provides that a business corporation attains or 15 terminates its status as a benefit corporation by shareholder 16 election. 17 ARTICLES OF INCORPORATION. The bill provides that a 18 benefit corporation’s articles of incorporation must have as a 19 purpose the creation of general public benefit which provides 20 a material positive impact on society and the environment as 21 assessed against a third-party standard. The bill provides 22 that a benefit corporation’s articles of incorporation may list 23 one or more specific public purposes. 24 BOARD ACTION. The bill requires a benefit corporation’s 25 board of directors, in addition to its fiduciary duty to make 26 decisions based on financial interests, to also consider 27 factors associated with creating general public benefit or 28 furthering a specific public benefit, or other beneficial goal. 29 The bill limits a director’s personal liability due to any 30 failure of the benefit corporation to accomplish a general or 31 specific public benefit purpose. 32 LEGAL ACTIONS. The bill prohibits a person from bringing an 33 action against a benefit corporation or its directors, except 34 in a benefit enforcement proceeding. A benefit enforcement 35 -16- LSB 1253XC (1) 86 da/nh 16/ 17

S.F. _____ proceeding can only be commenced by the benefit corporation 1 or derivatively by a person or group that holds shares in 2 the corporation or an equity interest in the corporation, by 3 a director, or by any other person or group provided in the 4 articles of incorporation. 5 BENEFIT DIRECTOR AND OFFICER. The bill requires a public 6 corporation’s board of directors to include a benefit director. 7 A privately held benefit corporation’s board may include 8 such director. Such director must be independent, having 9 no material relationship with the benefit corporation. The 10 bill provides that a benefit corporation may have a benefit 11 officer who is charged with overseeing the creation of the 12 corporation’s general public benefit or a specific public 13 benefit. 14 REPORT. The bill requires a benefit corporation to prepare 15 an annual benefit report to its shareholders. The report must 16 include information regarding the third-party standard used 17 to prepare the benefit report, the ways in which the benefit 18 corporation pursued its general and specific public benefits, 19 and an assessment of the overall social and environmental 20 performance of the benefit corporation indicating whether 21 the benefit corporation pursued its general or any specific 22 public benefit purpose. The bill also requires the benefit 23 corporation to file the benefit report with the secretary of 24 state and pay the secretary of state a filing fee. 25 -17- LSB 1253XC (1) 86 da/nh 17/ 17