BENEFIT CORPORATIONS

Iowa Code tit. XII, ch. 490, subch. XVII

in effect

Iowa Code § 490.1701 Application of subchapter — definitions.

490.1701. Application of subchapter — definitions. 1. If a corporation elects to become a benefit corporation under this subchapter in the manner prescribed in this subchapter, it is subject in all respects to the provisions of this chapter, except to the extent this subchapter imposes additional or different requirements, in which case such requirements apply. The inclusion of a provision in this subchapter does not imply that a contrary or different rule of law applies to a corporation that is not a benefit corporation. This subchapter does not affect a statute or rule of law that applies to a corporation that is not a benefit corporation. 2. As used in this subchapter: a. “Benefit corporation” means a corporation that includes in its articles of incorporation a statement that the corporation is subject to this subchapter. b. “Public benefit” means a positive effect, or reduction of negative effects, on one or more communities or categories of persons or entities, other than shareholders solely in their capacity as shareholders, or on the environment, including effects of an artistic, charitable, economic, educational, cultural, literary, medical, religious, social, ecological, or scientific nature. c. “Public benefit provision” means a provision in the articles of incorporation which states that the corporation shall pursue one or more identified public benefits. d. “Responsible and sustainable manner” means a manner that does all of the following: (1) Pursues through the business of the corporation the creation of a positive effect on society and the environment, taken as a whole, that is material taking into consideration the corporation’s size and the nature of its business. (2) Considers, in addition to the interests of shareholders, the interests of stakeholders known to be affected by the conduct of the business of the corporation. 2021 Acts, ch 165, §206, 230 Former section 490.1701 stricken effective January 1, 2022, by 2021 Acts, ch 165, §206, 230

Iowa Code § 490.1702 Name — share certificates.

490.1702. Name — share certificates. 1. The name of a benefit corporation may contain the words “benefit corporation”, the abbreviation “B.C.”, or the designation “BC”, any of which shall be deemed to satisfy the requirements of section 490.401, subsection 1, paragraph “a”. 2. Any share certificate issued by a benefit corporation, and any information statement delivered by a benefit corporation pursuant to section 490.626, subsection 2, must note conspicuously that the corporation is a benefit corporation subject to this subchapter. 2021 Acts, ch 165, §207, 230 Former section 490.1702 stricken effective January 1, 2022, by 2021 Acts, ch 165, §207, 230

Iowa Code § 490.1703 Certain amendments and transactions — votes required.

490.1703. Certain amendments and transactions — votes required. 1. Unless the articles of incorporation or bylaws require a greater vote, the approval of at least two-thirds of the voting power of the outstanding shares of the corporation entitled to vote thereon, and, if any class or series of shares is entitled to vote as a separate group on any such amendment or transaction, the approval of at least two-thirds of the outstanding shares of each such separate voting group entitled to vote thereon, shall be required for a corporation that is not a benefit corporation to do any of the following: a. Amend its articles of incorporation to include a statement that it is subject to this subchapter. b. Merge with or into, or enter into a share exchange with, another entity, or effect a domestication or conversion, if, as a result of the merger, share exchange, domestication, or conversion, the shares of any voting group would become, or be converted into or exchanged for the right to receive, shares of a benefit corporation or shares or interests in an entity subject to provisions of organic law analogous to those in this subchapter; provided, however, that in the case of this paragraph “b”, if the shares of one or more, but not all, voting groups are so affected, then only the shares in the voting groups so affected shall be entitled to vote under this subsection. 2. Unless the articles of incorporation or bylaws require a greater vote, the approval of at least two-thirds of the voting power of the outstanding shares of the corporation entitled to vote thereon and, if any class or series of shares is entitled to vote as a separate group on any such amendment or transaction, the approval of at least two-thirds of the voting power of the outstanding shares of each such separate voting group, shall be required for a benefit corporation to do any of the following: a. Amend its articles of incorporation to eliminate a statement that the corporation is subject to this subchapter. b. Merge with or into, or enter into a share exchange with, another entity, or effect a domestication or conversion if, as a result of the merger, share exchange, domestication, or conversion, the shares of any voting group would become, or be converted into or exchanged for the right to receive, shares or interests in an entity that is neither a benefit corporation nor an entity subject to provisions of organic law analogous to those in this subchapter; provided, however, that in the case of this paragraph “b”, if the shares of one or more, but not all, voting groups are so affected, then only the shares in the voting groups so affected shall be entitled to vote under this subsection. 3. The vote required under subsections 1 and 2 is in addition to any vote otherwise required under this chapter. 2021 Acts, ch 165, §208, 230 Former section 490.1703 stricken effective January 1, 2022, by 2021 Acts, ch 165, §208, 230

Iowa Code § 490.1704 Duties of directors.

490.1704. Duties of directors. 1. Each member of the board of directors of a benefit corporation, when discharging the duties of a director, shall act according to all of the following: a. In a responsible and sustainable manner. b. In a manner that pursues the public benefit or benefits identified in any public benefit provision. 2. In fulfilling the duties under subsection 1, a director shall consider, to the extent affected, in addition to the interests of shareholders generally, the separate interests of stakeholders known to be affected by the business of the corporation including all of the following: a. The employees and workforces of the corporation, its subsidiaries, and its suppliers. b. Customers. c. Communities or society, including those of each community in which offices or facilities of the corporation, its subsidiaries, or its suppliers are located. d. The local and global environment. 3. A director of a benefit corporation shall not, by virtue of the duties imposed by subsections 1 and 2, owe any duty to a person other than the benefit corporation due to any interest of the person in the status of the corporation as a benefit corporation or in any public benefit provision. 4. Unless otherwise provided in the articles of incorporation, the violation by a director of the duties imposed by subsections 1 and 2 shall not constitute an intentional infliction of harm on the corporation or the shareholders for the purposes of section 490.202, subsection 2, paragraphs “d” and “e”. 2021 Acts, ch 165, §209, 230; 2022 Acts, ch 1058, §7

Iowa Code § 490.1705 Annual benefit report.

490.1705. Annual benefit report. 1. No less than annually, a benefit corporation shall prepare a benefit report addressing the efforts of the corporation during the preceding year to operate in a responsible and sustainable manner, to pursue any public benefit or benefits identified in any public benefit provision, and to consider the interests described in section 490.1704, subsection 2. The annual benefit report must include all of the following: a. The objectives that the board of directors has established for the corporation to operate in a responsible and sustainable manner, to pursue any public benefit or benefits identified in any public benefit provision, and to consider the interests described in section 490.1704, subsection 2. b. The standards the board of directors has adopted to measure the corporation’s progress in operating in a responsible and sustainable manner, in pursuing the public benefit or benefits identified in any public benefit provision, and in considering the interests described in section 490.1704, subsection 2. c. If the articles of incorporation or bylaws require that the corporation use an independent third-party standard in reporting on the corporation’s progress in operating in a responsible and sustainable manner, in pursuing any public benefit or benefits identified in any public benefit provision, or in considering the interests described in section 490.1704, subsection 2, or if the board of directors has chosen to use such a standard, the applicable standard so required or chosen. d. An assessment of the corporation’s success in meeting the objectives and standards identified in paragraphs “a” and “b”, and, if applicable, paragraph “c”, and the basis for that assessment. 2. The benefit corporation shall deliver to each shareholder, or make available and provide written notice to each shareholder of the availability of, the annual benefit report required by subsection 1 on or before the earlier of the following: a. One hundred twenty days following the end of the fiscal year of the benefit corporation. b. The time that the benefit corporation delivers any other annual reports or annual financial statements to its shareholders. 3. Any shareholder that has not received or been given access to an annual benefit report within the time required by subsection 2 may make a written request that the corporation deliver or make available the annual benefit report to the shareholder. If a benefit corporation does not deliver or make available an annual benefit report to the shareholder within five business days of receiving such request, the requesting shareholder may apply to the district court of the county where the corporation’s principal office or, if none in this state, its registered office, is located for an order requiring delivery of or access to the annual benefit report. The court shall dispose of an action under this subsection 3 on an expedited basis. 4. A benefit corporation shall post all of its annual benefit reports on the public portion of its internet site, if any. If a benefit corporation does not have an internet site, the benefit corporation shall provide a copy of its most recent annual benefit report, without charge, to any person that requests a copy in writing. 2021 Acts, ch 165, §210, 230

Iowa Code § 490.1706 Rights of action.

490.1706. Rights of action. 1. Except in a proceeding authorized under section 490.1705, subsection 3, or this section, no person other than the corporation, or a shareholder in the right of the corporation pursuant to subsection 2, may bring an action or assert a claim with respect to the violation of any duty applicable to a benefit corporation or any of its directors under this subchapter. 2. Except for a proceeding brought under section 490.1705, subsection 3, a proceeding by a shareholder of a benefit corporation claiming violation of any duty applicable to a benefit corporation or any of its directors under this subchapter is subject to all of the following: a. The proceeding must be brought in a derivative proceeding pursuant to subchapter VII, part 4. b. The proceeding may be brought only by a shareholder of the benefit corporation that at the time of the act or omission complained of either individually, or together with other shareholders bringing such action collectively, owned directly or indirectly at least five percent of a class of the corporation’s outstanding shares or, in the case of a corporation with shares traded on an organized market as described in section 490.1302, subsection 2, paragraph “a”, subparagraph (2), either that percentage of shares or shares with a market value of at least five million dollars at the time the proceeding is commenced. 3. A suit under subsection 2 shall not be maintained if, during the pendency of the suit, the shareholder individually fails, or the shareholders collectively fail, to continue to own directly or indirectly the lesser of the number of shares owned at the time the proceeding is commenced or five percent of a class of the corporation’s shares. 2021 Acts, ch 165, §211, 230