Social Purpose Corporations Are On Their Way to Washington State

Photo by Frank Starmer. Some rights reserved.

On March 30, Washington state Governor Christine Gregoire signed HB2239, a bill creating a new category of for-profit corporation called “social purpose corporations.” The idea behind this bill, another of which is already in effect in California with “benefit corporations,” is to give CEOs and directors legal coverage to make environmentally and socially conscious business decisions without having  to appease company shareholders, a major stumbling block where corporate interests are concerned.

The bill will go into effect beginning June 7 of this year. The 13 member strong Corporate Act Revision Committee sculpted the draft of the bill over the course of two years, outlining the criteria of what defines or qualifies as a “social purpose corporation.” The decision from within to elect to become one of these benefit corporations requires a two-thirds majority of shareholder approval, and the articles of incorporation of a benefit corporation will state that their mission as an entity “may be contrary to maximizing profits.”

This law offers more than just a glimmer of hope for the future of sound business here in Washington state. It offers companies who are willing to make a commitment to greener business standards and social motives a means to act transparently, without succumbing to pressure from stockholders, and a change to set broad goals that will benefit all of us in the long term. Davis Wright Tremaine has a nice client advisory that outlines the law section by section.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: