Code of the District of Columbia

§ 29–1301.02. Definitions.

(a) For the purposes of this chapter, the term:

(1) “Benefit corporation” means a business corporation:

(A) That has elected to become subject to this chapter; and

(B) The status of which as a benefit corporation has not been terminated under § 29-1301.06.

(2) “Benefit director” means either:

(A) The director designated as the benefit director of a benefit corporation under § 29-1303.02; or

(B) A person with one or more of the powers, duties, or rights of a benefit director to the extent provided in the bylaws under § 29-1303.02.

(3) “Benefit enforcement proceeding” means any claim or action for:

(A) Failure of a benefit corporation to pursue or create general public benefit or a specific public benefit purpose set forth in its articles of incorporation; or

(B) A violation of any obligation, duty, or standard of conduct under this chapter.

(4) “Benefit officer” means the individual designated as the benefit officer of a benefit corporation under § 29-1303.04.

(5) “General public benefit” means the material positive impact that the business and operations of a benefit corporation has on society and the environment, taken as a whole, assessed against a third-party standard.

(6) “Independent”, subject to subsection (b) of this section, means having no material relationship with a benefit corporation or a subsidiary of the benefit corporation. A person who serves as a benefit director or benefit officer is not independent by virtue of such service. A material relationship between a person and a benefit corporation or any of its subsidiaries will be conclusively presumed to exist if any of the following apply:

(A) The person is, or has been within the last 3 years, an employee other than a benefit officer of the benefit corporation or a subsidiary of the benefit corporation.

(B) An immediate family member of the person is, or has been within the last 3 years, an executive officer other than a benefit officer of the benefit corporation or its subsidiary.

(C) There is beneficial or record ownership of 5% or more of the outstanding shares of the benefit corporation by:

(i) The person; or

(ii) An entity of which the person is a director, an officer, or a manager or in which the person owns beneficially or of record 5% or more of the outstanding equity interests.

(7) “Minimum status vote” means:

(A) In the case of a business corporation, in addition to any other required approval or vote, the satisfaction of the following conditions:

(i) The shareholders of every class or series shall be entitled to vote as a separate voting group on the corporate action regardless of a limitation stated in the articles of incorporation or bylaws on the voting rights of any class or series.

(ii) The corporate action must be approved by vote of the shareholders of each voting group entitled to cast at least 2/3 of the votes that all shareholders of the voting group are entitled to cast on the action.

(B) In the case of an entity other than a business corporation, in addition to any other required approval, vote, or consent, the satisfaction of the following conditions:

(i) The holders of each class or series of equity interest in the entity that are entitled to receive a distribution of any kind from the entity shall be entitled as a separate voting group to vote on or consent to the action regardless of any otherwise applicable limitation on the voting or consent rights of any class or series.

(ii) The action must be approved by vote or consent of each voting group described in sub-subparagraph (i) of this subparagraph entitled to cast at least 2/3 of the votes or consents that all the members of the group are entitled to cast on the action.

(8) “Specific public benefit” includes:

(A) Providing low-income or underserved individuals or communities with beneficial products or services;

(B) Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business;

(C) Preserving the environment;

(D) Improving human health;

(E) Promoting the arts, sciences, or advancement of knowledge;

(F) Increasing the flow of capital to entities with a public benefit purpose; and

(G) The accomplishment of any other particular benefit on society or the environment.

(9) “Subsidiary” means, subject to subsection (b) of this section, in relation to a person, an entity in which the person owns beneficially or of record 50% or more of the outstanding equity interests.

(10) “Third-party standard” means a recognized standard for defining, reporting, and assessing corporate social and environmental performance that is:

(A) Comprehensive in that it assesses the effect of the business and its operations upon the interests listed in § 29-1303.01(a)(1)(B), (C), (D), and (E);

(B) Developed by an organization that is independent of the benefit corporation and satisfies the following requirements:

(i) Not more than 1/3 of the members of the governing body of the organization are representatives of any of the following:

(I) An association of businesses operating in a specific industry the performance of whose members is measured by the third-party standard;

(II) Businesses from a specific industry or an association of businesses in that industry; or

(III) Businesses whose performance is assessed against the standard.

(ii) The organization is not materially financed by an association or business described in sub-subparagraph (i) of this subparagraph;

(C) Credible because the standard is developed by a person that both:

(i) Has access to necessary expertise to assess overall corporate social and environmental performance; and

(ii) Uses a balanced multi-stakeholder approach, including a public comment period of at least 30 days to develop the standard; and

(D) Transparent because the following information is publicly available:

(i) About the standard:

(I) The criteria considered when measuring the overall social and environmental performance of a business; and

(II) The relative weightings of those criteria; and

(ii) About the development and revision of the standard:

(I) The identity of the directors, officers, material owners, and the governing body of the organization that developed and controls revisions to the standard;

(II) The process by which revisions to the standard and changes to the membership of the governing body are made; and

(III) An accounting of the sources of financial support for the organization, with sufficient detail to disclose any relationships that could reasonably be considered to present a potential conflict of interest.

(b) For purposes of the definitions of the terms “independent” and “subsidiary” in subsection (a) of this section, a percentage of ownership in an entity shall be calculated as if all outstanding rights to acquire equity interests in the entity have been exercised.


(May 1, 2013, D.C. Law 19-305, § 2(b), 60 DCR 2735.)