AB 361 creates new classes of corporations in California

Recently, Governor Brown signed Assembly Bill 361 into law.  The bill makes California the 6th state in the nation to adopt two new classes of corporations.  The new classes of corporations are unique in that they are expected to pursue business goals beyond just profit.

Businesses that form as “benefit corporations” are required by law to consider their employees, suppliers, community, and environment when making decisions.

Also, businesses can now form as “flexible purpose corporations,” which can pursue goals with social benefits and that are not related to profit, or maximizing shareholder value.

Traditional corporations are expected to focus on profit maximization.  These corporations face the risk of having a lawsuit filed against them if they pursue non-profit related goals that negatively affect profits.

Contact the Orange County business formation attorneys of DAILY ALJIAN LLP at 949-861-2524 today, if you are seeking legal advice on forming a business in California.