Nevada Joining Benefit Corporations Wave
At least 12 other states have laws on the books allowing companies to organize in this way, which allows them to focus on environmental and social performance, as well as profits.
Nevada soon will be at least the 13th state allowing companies to organize as benefit corporations, a corporate structure that allows them to focus on environmental and social performance, as well as profits. Nevada Gov. Brian Sandoval ceremonially signed the legislation permitting this, AB89, this week, although he officially signed it in May, The Las Vegas Sun reported.
The new law will take effect Jan. 1, 2014.
A State Bar of Nevada paper about benefit corporations lists three primary characteristics of this corporate structure:
- "It must have a corporate purpose to create a material positive impact on society and the environment";
- "Its directors have a fiduciary duty to consider non-financial stakeholders"; and
- "It must report publicly on its overall environmental and social performance, using comprehensive, credible, independent and transparent third party standards."
Benefit corporations are immune from lawsuits for not putting profits first, according to The Sun's coverage.
The State Bar's paper indicates Maryland was the first state with such a law, and its statute took effect Oct. 1, 2010. Other states with benefit corporation laws now in effect are New Jersey, Vermont, Virginia, Hawaii, California, New York, South Carolina, Louisiana, Pennsylvania, Massachusetts, and Illinois, it states.