June 7, 2017
On June 6, 2017, Governor Hickenlooper signed Colorado House Bill 17-1200 into law, amending the Colorado Public Benefit Corporations Act (C.R.S. § 7-101-501 et seq.) (the Act). The key amendments are:
Name Requirement Removed
The Act no longer requires a public benefit corporation (PBC) to include “PBC,” “P.B.C.” or “public benefit corporation” in its legal name. However, a PBC that opts not to do so must, for all future stock issuances, provide notice of its PBC status to the acquirers of that stock.
Limited Cooperative Associations Eligible for PBC Status
The Act clarifies that a limited cooperative association formed under C.R.S. § 7-58-101 et seq. may take the form of a PBC, and that the voting requirements described in C.R.S. §§ 7-101-504(1) and (4) relating to certain amendments, mergers, and dissenter’s rights apply to the equity holders of PBCs that are cooperative entities in the same way they apply to stockholders of PBCs that are corporations.
List of Fundamental Transactions Subject to 2/3 Vote Broadened
The Act expands the list of corporate transactions requiring a two thirds vote of each class of stock outstanding (including classes of non-voting stock) to include virtually any transaction that results in (a) a sale or other disposal of all or substantially all of the PBC’s stock or assets, (b) a conversion or reorganization, or (c) any diminution or alteration of the public benefit purpose or purposes stated in the PBC’s articles of incorporation.
The amendments also:
– Clarify the PBC’s annual report requirements with respect to the third party standard used in such reports.
– Clarify that the Act is limited to PBCs and is not intended to, and does not, affect how the Colorado corporate laws applicable to non-PBC corporations (or any other corporate entity) should be applied under Colorado law.
For more information on these changes or the Act generally, please contact the authors of this Alert.