Last year, the Senator Mark DeSaulnier introduced SB 1463 to provide for an entirely new form of entity - the flexible purpose corporation.  SB 1463 did not move forward and died at the end of the 2009-2010 legislative biennium.   With the deadline for new bill introductions quickly approaching (February 18), Senator DeSaulnier has introduced a new bill SB 201 to authorize and regulate the formation and operation of flexible purpose corporations.

A flexible purpose corporation is a business corporation that is required to include one or more of the following special purposes in its articles of incorporation:

• One or more charitable or public purpose activities that a nonprofit public benefit corporation is authorized to carry out.
• The purpose of promoting positive short-term or long-term effects of, or minimizing adverse short-term or long-term effects of, the flexible purpose corporation’s activities upon any of the following:
  • The flexible purpose corporation’s employees, suppliers, customers, and creditors.
  • The community and society.
  • The environment.

The basic concept is to allow for the formation of a business entity that allows directors to pursue profitability and a special purpose.