Senate unanimously approves measure allowing formation of benefit corporation

Legislation allowing Oklahoma companies to register as “benefit corporations” is now headed to the governor’s desk. The designation would give greater legal protection for companies pursuing business models that are for profit, while placing a high priority on having a positive impact on society.

Sen. Julia Kirt, D-Oklahoma City, is the Senate principal author of House Bill 2423. It was the freshman member’s first bill to pass out of the Senate, and was approved unanimously on Monday. The House authors are Rep. Lewis Moore, R-Arcadia, and Rep Ben Loring, D-Miami.

“Thirty-one states already give businesses the opportunity to register as benefit corporations. The designation reflects a clear standard of purpose, accountability and transparency for public benefit in addition to generating profits,” Kirt explained. “It can be a tool for branding and a tool for attracting and retaining employees. As for the corporation itself, officers of a benefit corporation are afforded greater legal protection to pursue a business model that places social and environmental values on equal footing with profits.”

Among those states that already recognize the benefit company model, Kirt said there are nearly 5,000 registered benefit companies, including Kickstarter, Method Home Products, and Lung Biotechnologies.

“Our communities and business gain when companies become benefit corporations. Studies show employees increasingly prefer working for companies that impact society, and that employee engagement is strongly tied to profitability,” Kirt said. “Benefit corporations also have branding benefits with many consumers willing to pay more for services and products from socially responsible brands."

Under HB 2423, existing businesses could become benefit corporations with the support of two-thirds of their shareholders. Kirt noted benefit companies would be taxed at the same rate as other corporate entities.

If signed into law, the legislation would take effect on November 1, 2019.