JOINT FAVORABLE REPORT
AN ACT CONCERNING BENEFIT CORPORATIONS AND ENCOURAGING SOCIAL ENTERPRISE.
Joint Favorable Substitute Change of Reference to Judiciary
SPONSORS OF BILL:
REASONS FOR BILL:
This bill provides a statutory framework for establishing corporations to benefit society. This bill follows suit of twenty-one other states that have already passed similar legislation, seeking to eliminate the barriers of entry that face entrepreneurs and spark innovation in the state economy. The bill allows market-driven solutions to address troubling social issues, in turn taking the burden off of the government and freeing up public resources.
RESPONSE FROM ADMINISTRATION/AGENCY:
Catherine H. Smith, Commissioner, Department of Economic and Community Development (DECD): Commissioner Smith provided testimony that this bill helps businesses “intent on generating profits and providing a public benefit with a streamlined manner to incorporate legally as Benefit Corporations”, something that about twenty other states have already passed. She states that Connecticut would be well suited to pass such legislation. The Commissioner also states that these corporations do not rely on state or federal dollars and therefore free up public resources. The Commissioner strongly encourages support for the bill, testifying that it will “have a lasting, positive societal and financial impact on the State for years to come.”
Denise W. Merrill, Secretary of the State: Secretary Merrill testified that the Office of the Secretary of the State is responsible for business formation and also maintains the business registry. The Secretary did not comment on the details of the bill, except for stating that the agency would be responsible for implementing it and would require a one-time amount of $60,000 in order to adjust their computer systems for the new entity type.
NATURE AND SOURCES OF SUPPORT:
Erik Trojian, Policy Director, B Lab: Mr. Trojian testified that the bill would provide freedom to entrepreneurs and business owners to consider other factors in addition to profit, such as the environment or procuring supplies locally. He states that the legislation is a voluntary and cost free option that would “deregulate the traditional fiduciary duty of a corporation and allow the free market to solve some of the pressing issues facing society.” The bill can attract new jobs as well as investment, providing opportunities for economic development in Connecticut.
Doug Hardy, Co-Owner, CTNewsJunkie and Independent Media Network: Mr. Hardy testified in support of the bill, as it would allow the “news-side of the industry” to “operate based on the social value inherent” in news reporting.
Boehringer Ingelheim Cares Foundation: Boehringer Ingelheim testified that the bill will give entrepreneurial leaders the option to solve community problems in new ways. This bill will reduce the barriers of entry that face entrepreneurs and spark innovation in the state economy.
Eric George, Connecticut Business & Industry Association (CBIA): Mr. George stated that the bill would allow incorporators to choose a Benefit Corporation when incorporating and would not receive any advantage afforded to other for-profit business entities. The bill is a way for the State to become uniquely attractive to socially-minded investors and organizations.
Claire Leonardi, CEO, Connecticut Innovations (CI): Ms. Leonardi states that the bill provides the State the opportunity to “support and develop” social enterprises, a new type of company. She states that the chief reason to support growth in Connecticut's social enterprise sector is that the new generations of young entrepreneurs that are graduating want to build businesses that solve problems and not focus solely on generating profits. This sector will help the State to build sustainable, market-driven solutions to address the most troubling social issues, thus freeing the government from the burden of doing so.
Dawn McDaniel, Executive Vice President, Connecticut Veterans Chamber of Commerce: Ms. McDaniel testified that the bill increases the opportunity and options for veteran business ownership, as social enterprise is a popular model amongst veteran business owners.
Hillel Goldman, Connecticut Bar Association (CBA): Mr. Goldman testified that a benefit corporation has three major characteristics: “they must have a corporate purpose to create a material positive impact on society and the environment in addition to making a profit, directors now must consider nonfinancial stakeholders as well as the interests of financial shareholders, and they are obligated to report overall social and environmental performance using an independent third-party standard.” The bill will promote social entrepreneurship in Connecticut, eliminating barriers, legal or otherwise, for businesses incorporated as Social Benefit Corporations.
Testimony was offered by the following people in support of the need of a law to create Benefit Corporations and Encouraging Social Enterprise and state that this bill will attract and keep entrepreneurs and social enterprise investors within Connecticut, alongside with creating a stronger economy within the State:
Supriyo Chatterjee, West Hartford
Alan Tan, President & CEO, Tan2000
Onyeka Obiocha, Windsor
Leslie Krumholz, Guilford
Jacqueline Johnson, Granby
Bruce Carlson, President & CEO, Connecticut Technology Council
James Woulfe, Public Policy & Impact Investing Specialist, reset
Kate Emery, The Walker Group
Marvin Weil, East Hartford
Bryan Nurnberger, Westport
iMission Partners LLC
Judith Greiman, Connecticut Conference of Independent Colleges
Jeff Shaw, Director of Public Policy, CT Association of Nonprofits
NATURE AND SOURCES OF OPPOSITION:
Reported by: Mark Vanderhoof