On October 1, 2015, a new law went into effect in Montana which authorized and provided for the governance of a benefit corporation. Montana is the 32nd state to authorize this special kind of corporation—which has the dual goals of creating a profit for its shareholders and benefitting society.
The Montana Benefit Corporation Act was enacted by House Bill 258. Below is a brief examination of the Act.
Formation. A benefit corporation is formed in the same manner as a general business corporation. However, the benefit corporation's articles of incorporation must state that the corporation is a benefit corporation.
CT Tip: To incorporate, file articles of incorporation with the Montana Secretary of State and comply with all applicable requirements. The corporation’s name must be distinguishable from other active business names. The corporation must appoint and maintain a Montana registered agent and registered office in the state.
Election of benefit corporation status. An existing Montana corporation may become a benefit corporation by amending its articles of incorporation to include a statement that the corporation is a benefit corporation. A “supermajority” vote of at least two-thirds of the shareholders of each class or series entitled to vote is required.
Purpose. A Montana benefit corporation has a purpose of creating a general public benefit. “General public benefit” means a material, positive impact on society and the environment, taken as a whole, as assessed against a third-party standard, from the business and operations of a benefit corporation. The articles of incorporation of a benefit corporation may also identify one or more specific public benefits such as “providing low-income individuals with beneficial services or products”, “improving human health”, or “preserving the environment.”
Directors' standard of conduct. In discharging their duties and in considering the best interests of the benefit corporation, the directors must consider the effects of any action or inaction upon various stakeholders, including the corporation's shareholders, employees, customers, suppliers, community and societal factors, the local and global environment, the short-term and long-term interests of the benefit corporation, and its ability to accomplish its general public benefit purpose and any specific public benefit purpose.
Annual benefit report. Each year, the board of directors must prepare and deliver to each shareholder an annual benefit report in which it describes its efforts to pursue its general and specific benefits and assesses its successes or failures. The exact contents of the report are set forth in the statute.
For additional information, see our benefit corporation services, our Montana registered agent information, or feel free to contact us. As always, if you have any questions about benefit corporations or other Montana business entities, your CT Service team is ready to help.