A release from the Office of the Governor:
Gov. Dannel P. Malloy announced Tuesday that he will introduce legislation during the upcoming regular session of the General Assembly that establishes “benefit corporations” in Connecticut, intended to provide legal protections to businesses that use profits to advance a particular cause or to promote other social benefits.
The creation of this new corporate form will draw these types of businesses — commonly known as social enterprises — to our state, encourage current and future social entrepreneurs already working in Connecticut, and create new jobs while benefiting the public good.
“By creating a new corporate entity — the benefit corporation — Connecticut entrepreneurs can start businesses that compete in the private sector while also working to solve the toughest social and economic problems that our communities face,” said Malloy, who announced the legislation at the Pratt Street offices of reSET, the Social Enterprise Trust, in Hartford. “This legislation will help ensure that social entrepreneurs create benefit corporations and jobs here in Connecticut, and encourage a new generation of social entrepreneurs dedicated to improving our communities and our state.”
Under current law, traditional business corporations can operate towards any legal purpose, its board of directors and officers must work toward the financial interests of its shareholders, and it is not required to evaluate or report on its social or environmental performance.
Under the governor’s proposed legislation, benefit corporations will be simultaneously subject to traditional business corporation laws, but:
- Allows social entrepreneurs to mix profit and purpose by providing a public benefit that has a materially positive impact on society and the environment taken as a whole, as opposed to only considering business practices that maximize shareholder wealth;
- Are held accountable for living up to its stated commitment by being assessed by a third-party standard measuring the extent of the social impact created; and
- Are required to give annual “benefit reports” to shareholders and to the public through their websites.
Nineteen other states, including New York, Massachusetts, Rhode Island and Vermont, have passed similar legislation.
“All of us who are working toward the goal of making Connecticut a hub of social enterprise are delighted that Governor Malloy is demonstrating leadership by introducing benefit corporation legislation as a centerpiece of his legislative agenda for the 2014 session,” said Kate Emery, CEO and founder of reSET, a not-for-profit organization that promotes and encourages the growth of social enterprises in Connecticut. “reSET, the Social Enterprise Trust, has been providing educational and support programs to social enterprises and there is a clear demand for this new form of business structure. We will work hard to attract bipartisan support for the bill, and look forward to speedy passage and adoption into law this year.”
The proposal will be included in the Governor’s legislative package for the upcoming 2014 regular session of the General Assembly, which begins February 5. The Governor is also scheduled to give his annual State of the State address on opening day of the session.