SB 22-045

Senate Bill 22-045 modifies Colorado’s Public Benefit Corporation Act by making it easier for companies to convert into or out of public benefit corporations (PBCs) with a simple majority vote instead of the previous two-thirds requirement. It also removes certain shareholder rights when objecting to these conversions and clarifies that directors can act without breaching their duties, even if they don’t perfectly balance all interests involved in running a PBC. The bill has been signed into law, meaning these changes are now official and will affect how corporations operate in Colorado.

Official Summary

The act modifies the "Public Benefit Corporation Act of Colorado" as follows: Eliminates the requirement for approval of two-thirds of the outstanding shares to convert an existing corporation to a public benefit corporation (PBC) or an existing PBC into a non-PBC, thereby defaulting to the majority vote requirement applicable to other corporate conversions; Eliminates the application of appraisal rights for shareholders objecting to the conversion of a non-PBC to a PBC; Clarifies that a director's ownership of stock in a PBC does not inherently create a conflict of interest and specifies that, absent a conflict of interest, a director does not act in bad faith and does not breach a duty of loyalty if the director, in directing the business of the PBC, fails to satisfy a requirement to balance shareholder pecuniary interests, the best interests of those materially affected by the action, and the specific public benefit of the PBC; and Clarifies the requirements for actions to enforce the requirements imposed on directors to balance the interests of shareholders, those materially affected by the corporate action, and the public benefit of the PBC.(Note: This summary applies to this bill as enacted.)

Votes