H.F. 288 SUBCHAPTER I 1 PRELIMINARY PROVISIONS 2 Section 1. NEW SECTION . 490B.101 Short title. 3 This chapter shall be known and may be cited as the “Iowa 4 Benefit Corporation Act” . 5 Sec. 2. NEW SECTION . 490B.102 Definitions. 6 Except as otherwise provided in this chapter, or unless the 7 context otherwise requires, the words and phrases used in this 8 chapter shall have the same meaning as the words and phrases 9 used in chapter 490, including but not limited to the words 10 and phrases used in section 490.140. In addition, all of the 11 following shall apply: 12 1. “Benefit corporation” means a business corporation, if 13 all of the following apply: 14 a. It has elected to become subject to this chapter. 15 b. Its status as a benefit corporation has not been 16 terminated. 17 2. “Benefit director” means any of the following: 18 a. A director designated as the benefit director of a 19 benefit corporation under section 490B.302. 20 b. A person with one or more of the powers, duties, or 21 rights of a benefit director to the extent provided in the 22 articles of incorporation, bylaws, or a shareholder agreement 23 under section 490B.302, subsection 6. 24 3. “Benefit enforcement proceeding” means a claim or action 25 relating to any of the following: 26 a. The failure of a benefit corporation to pursue or create 27 general public benefit or a specific public benefit set forth 28 in its articles of incorporation. 29 b. A violation of any obligation, duty, or standard of 30 conduct provided under this chapter. 31 4. “Benefit officer” means an individual designated as 32 the benefit officer of a benefit corporation under section 33 490B.304. 34 5. “Business corporation” means a corporation formed as a 35 -1- LSB 1185HH (6) 85 da/nh 1/ 19

H.F. 288 domestic corporation under chapter 490. 1 6. “Entity” means a person formed under the laws of 2 this state including but not limited to a limited liability 3 company under chapter 489; a corporation under chapter 490; 4 a nonprofit corporation under chapter 504; a partnership, 5 limited partnership, limited liability partnership, or limited 6 liability limited partnership under chapter 486A or 488; or a 7 cooperative association or other cooperative organized under 8 chapter 497, 498, 499, 501, or 501A. 9 7. “General public benefit” means a material positive impact 10 on society or the environment, taken as a whole, assessed 11 against a third-party standard, which results from the business 12 and operations of a benefit corporation. 13 8. “Independent” means having no material relationship 14 with a benefit corporation or a subsidiary of the benefit 15 corporation as provided in section 490B.304A. 16 9. “Minimum status vote” means any of the following: 17 a. In the case of a business corporation, in addition to any 18 other required approval or vote required under chapter 490, the 19 satisfaction of all of the following conditions: 20 (1) The shareholders of every class or series are 21 entitled to vote as a separate voting group on the corporate 22 action regardless of a limitation stated in the articles of 23 incorporation or bylaws regarding the voting rights of any 24 class or series. 25 (2) The corporate action is approved by vote of the 26 shareholders of each class or series entitled to cast at least 27 two-thirds of the votes that all shareholders of the class or 28 series are entitled to cast on the action. 29 b. In the case of an entity other than a business 30 corporation, in addition to any other required approval, vote, 31 or consent, the satisfaction of all the following conditions: 32 (1) The holders of every class or series of equity interest 33 in the entity that are entitled to receive a distribution of 34 any kind from the entity are entitled to vote on or consent to 35 -2- LSB 1185HH (6) 85 da/nh 2/ 19

H.F. 288 the action regardless of any otherwise applicable limitation on 1 the voting or consent rights of any class or series. 2 (2) The action is approved by vote or consent of the 3 holders described in subparagraph (1) entitled to cast at least 4 two-thirds of the votes or consents that all of those holders 5 are entitled to cast on the action. 6 10. “Specific public benefit” means any of the following: 7 a. Providing low-income or underserved individuals or 8 communities with beneficial products or services. 9 b. Promoting economic opportunity for individuals or 10 communities beyond the creation of jobs in the normal course 11 of business. 12 c. Protecting or restoring the environment. 13 d. Improving human health. 14 e. Promoting the arts, sciences, or advancement of 15 knowledge. 16 f. Increasing the flow of capital to entities with a purpose 17 to benefit society or the environment. 18 g. Conferring any other particular benefit on society or the 19 environment. 20 11. “Subsidiary” means, in relation to a person, an entity 21 in which the person holds beneficially or of record fifty 22 percent or more of the outstanding equity interests. 23 12. “Third-party standard” means a recognized standard 24 for defining, reporting, and assessing corporate social or 25 environmental performance that is all of the following: 26 a. Comprehensive because the standard assesses the effect of 27 the business and its operations upon the interests listed in 28 section 490B.301, subsection 1, paragraphs “b” through “e” . 29 b. Developed by an entity that is not controlled by the 30 benefit corporation. 31 c. Credible because the standard is developed by an entity 32 that meets all of the following conditions: 33 (1) Has access to necessary expertise to assess overall 34 corporate social or environmental performance. 35 -3- LSB 1185HH (6) 85 da/nh 3/ 19

H.F. 288 (2) Uses a balanced multiple stakeholder approach to 1 develop the standard, including a reasonable public comment 2 period. 3 d. Transparent because the following information is made 4 publicly available: 5 (1) A description of the standard that includes all of the 6 following: 7 (a) Criteria considered when measuring the overall social 8 or environmental performance of a business corporation. 9 (b) The relative weightings, if any, of the criteria 10 described in subparagraph division (a). 11 (2) A description of the development and revision of the 12 standard which includes all of the following: 13 (a) The identity of the directors, officers, material 14 owners, and the governing body of the entity that developed and 15 controls revisions to the standard. 16 (b) The process by which revisions to the standard and 17 changes to the membership of the governing body are made. 18 (c) An accounting of the revenue and sources of financial 19 support for the entity, with sufficient detail to disclose any 20 relationship that could reasonably be considered to present a 21 potential conflict of interest. 22 Sec. 3. NEW SECTION . 490B.103 Application and effect of 23 chapter. 24 1. This chapter applies to all benefit corporations. 25 2. The existence of a provision of this chapter shall not 26 of itself create an implication that a contrary or different 27 rule of law is applicable to a business corporation that is not 28 a benefit corporation. This chapter shall not affect a statute 29 or rule of law that is applicable to a business corporation 30 that is not a benefit corporation. 31 3. Chapter 490 shall be construed as part of this chapter 32 and shall apply to benefit corporations, including but not 33 limited to their formation or organization, reports, fees, 34 authority, powers, rights, and the regulation and conduct of 35 -4- LSB 1185HH (6) 85 da/nh 4/ 19

H.F. 288 their affairs. 1 4. A benefit corporation may be subject simultaneously to 2 this chapter and one or more other chapters of this title, 3 including chapter 496C. In such event, the provisions of 4 this chapter shall take precedence with respect to a benefit 5 corporation. 6 5. A provision of the articles of incorporation or bylaws of 7 a benefit corporation shall not limit, be inconsistent with, or 8 supersede a provision of this chapter. 9 Sec. 4. NEW SECTION . 490B.104 Incorporation of benefit 10 corporation. 11 A benefit corporation shall be incorporated in accordance 12 with chapter 490, division II. The articles of incorporation 13 of a benefit corporation must also state that it is a benefit 14 corporation. 15 Sec. 5. NEW SECTION . 490B.105 Election of benefit 16 corporation status. 17 1. An existing business corporation may become a benefit 18 corporation under this chapter by amending its articles of 19 incorporation so that the articles contain, in addition to 20 the requirements of chapter 490, division II, a statement 21 that the corporation is a benefit corporation. In order to 22 be effective, the amendment must be adopted by at least the 23 minimum status vote. 24 2. a. An entity that is not a benefit corporation may 25 become a benefit corporation pursuant to subsection 1 if all 26 of the following apply: 27 (1) The entity is one of the following: 28 (a) A party to a merger or conversion. 29 (b) An exchanging entity in a share exchange. 30 (2) The surviving, new, or resulting entity in the merger, 31 conversion, or share exchange is to be a benefit corporation. 32 b. In order to be effective, a plan of merger, conversion, 33 or share exchange subject to paragraph “a” must be adopted by at 34 least the minimum status vote. 35 -5- LSB 1185HH (6) 85 da/nh 5/ 19

H.F. 288 Sec. 6. NEW SECTION . 490B.106 Termination of benefit 1 corporation status. 2 1. A benefit corporation may terminate its status as 3 such and cease to be subject to this chapter by amending its 4 articles of incorporation to delete the provision required by 5 section 490B.104 or 490B.105 to be stated in the articles of a 6 benefit corporation. In order to be effective, the amendment 7 must be adopted by at least the minimum status vote. 8 2. If a plan of merger, conversion, or share exchange 9 would have the effect of terminating the status of a business 10 corporation as a benefit corporation, the plan must be adopted 11 by at least the minimum status vote in order to be effective. 12 Any sale, lease, exchange, or other disposition of all or 13 substantially all of the assets of a benefit corporation, 14 unless the transaction is in the usual and regular course of 15 business, shall not be effective unless the transaction is 16 approved by at least the minimum status vote. 17 SUBCHAPTER II 18 CORPORATE PURPOSES 19 Sec. 7. NEW SECTION . 490B.201 Corporate purposes. 20 1. A benefit corporation shall have a purpose of creating 21 a general public benefit. This purpose is in addition to its 22 purpose under section 490.301. 23 2. The articles of incorporation of a benefit corporation 24 may identify one or more specific public benefits to be created 25 as a purpose in addition to any purpose provided in section 26 490.301 or subsection 1. The identification of a specific 27 public benefit under this subsection does not limit the 28 obligation of a benefit corporation under subsection 1. 29 3. The creation of a general public benefit as described 30 in subsection 1 and a specific public benefit as described 31 in subsection 2 must be in the best interests of the benefit 32 corporation. 33 4. A benefit corporation may amend its articles of 34 incorporation to add, amend, or delete the identification of a 35 -6- LSB 1185HH (6) 85 da/nh 6/ 19

H.F. 288 specific public benefit that it is the purpose of the benefit 1 corporation to create. In order to be effective, the amendment 2 must be adopted by at least the minimum status vote. 3 5. A professional corporation that is a benefit corporation 4 does not violate section 496C.4 by having the purpose to create 5 a general public benefit as provided in subsection 1 or a 6 specific public benefit as provided in subsection 2. 7 SUBCHAPTER III 8 ACCOUNTABILITY 9 Sec. 8. NEW SECTION . 490B.301 Standard of conduct for 10 directors. 11 1. In discharging the duties of their respective positions 12 and in considering the best interests of the benefit 13 corporation, a benefit corporation’s board of directors, 14 committees, and individual directors shall consider the effects 15 of any action or inaction upon all of the following: 16 a. The shareholders of the benefit corporation. 17 b. The employees and workforce of the benefit corporation, 18 its subsidiaries, and its suppliers. 19 c. The interests of customers as beneficiaries of the 20 general public benefit or specific public benefit of the 21 benefit corporation as provided in section 490B.201. 22 d. Community or societal factors, including those of 23 each community in which offices or facilities of the benefit 24 corporation, its subsidiaries, or its suppliers are located. 25 e. The local and global environment. 26 f. The short-term and long-term interests of the benefit 27 corporation, including but not limited to benefits that may 28 accrue to the benefit corporation from its long-term plans and 29 the possibility that these interests may be best served by the 30 continued independence of the benefit corporation. 31 g. The ability of the benefit corporation to create its 32 general public benefit or any specific public benefit as 33 provided in section 490B.201. 34 2. In discharging the duties of their respective positions 35 -7- LSB 1185HH (6) 85 da/nh 7/ 19

H.F. 288 and in considering the best interests of the benefit 1 corporation, a benefit corporation’s board of directors, 2 committees, and individual directors may consider any of the 3 following: 4 a. The interests referred to in section 490.1108A. 5 b. Any other pertinent factor or the interest of any other 6 person or group of persons deemed appropriate. 7 3. In discharging the duties of their respective positions 8 and in considering the best interests of the benefit 9 corporation, a benefit corporation’s board of directors, 10 committees, and individual directors need not give priority to 11 the interest of a particular person referred to in subsection 1 12 or 2 over the interests of any other person unless the benefit 13 corporation’s articles of incorporation state the benefit 14 corporation’s intention to give priority to a certain interest 15 related to a general public benefit or a specific public 16 benefit as provided in section 490B.201. 17 4. The consideration of an interest or factor in the manner 18 required by subsections 1 through 3 shall not constitute a 19 violation of section 490.830. 20 5. Except as provided in the articles of incorporation or 21 bylaws of a benefit corporation, a director is not personally 22 liable for monetary damages for any of the following: 23 a. An action or inaction in the course of performing the 24 duties of a director under subsections 1 through 3 if the 25 director performed the duties of office in compliance with this 26 section and section 490.830. 27 b. The failure of the benefit corporation to pursue or 28 create a general public benefit or a specific public benefit as 29 provided in section 490B.201. 30 6. A director of a benefit corporation does not have a duty 31 to a person who is a beneficiary of the general public benefit 32 or a specific public benefit of the benefit corporation as 33 provided in section 490B.201, arising from the status of the 34 person as a beneficiary. 35 -8- LSB 1185HH (6) 85 da/nh 8/ 19

H.F. 288 7. A director of a benefit corporation who makes a business 1 judgment in good faith fulfills the duty under this section if 2 all of the following apply: 3 a. The director is not interested in the subject of the 4 business judgment. 5 b. The director is informed with respect to the subject of 6 the business judgment to the extent the director reasonably 7 believes to be appropriate under the circumstances. 8 c. The director rationally believes that the business 9 judgment is in the best interests of the benefit corporation. 10 Sec. 9. NEW SECTION . 490B.302 Benefit director. 11 1. The board of directors of a benefit corporation that is 12 a publicly traded corporation shall, and the board of any other 13 benefit corporation may, include a director who is designated 14 the benefit director. Such director shall have, in addition 15 to the powers, duties, rights, and immunities of the other 16 directors of the benefit corporation, the powers, duties, 17 rights, and immunities provided in this subchapter. 18 2. a. A benefit director shall be elected, and may be 19 removed, in the manner provided by chapter 490, division VIII, 20 part A. Except as provided in subsection 6, the benefit 21 director shall be an individual who is independent. The 22 benefit director may serve as the benefit officer at the 23 same time as serving as the benefit director. The articles 24 of incorporation or bylaws of a benefit corporation may 25 prescribe additional qualifications of the benefit director not 26 inconsistent with this paragraph. 27 b. Notwithstanding paragraph “a” , a benefit director of 28 a professional corporation subject to chapter 496C is not 29 required to be independent. 30 3. The benefit director shall prepare, and the benefit 31 corporation shall include in the annual benefit report to 32 shareholders required by section 490B.401, the opinion of the 33 benefit director regarding all of the following: 34 a. Whether the benefit corporation acted in accordance with 35 -9- LSB 1185HH (6) 85 da/nh 9/ 19

H.F. 288 its general public benefit and any specific public benefit as 1 provided in section 490B.201 in all material respects during 2 the period covered by the report. 3 b. Whether the directors and officers complied with section 4 490B.301, subsection 1, and section 490B.303, subsection 1, 5 respectively. 6 c. If, in the opinion of the benefit director, the benefit 7 corporation’s directors or officers failed to comply with 8 paragraph “b” , a description of the ways in which the benefit 9 corporation’s directors or officers failed to comply. 10 4. An act or inaction of an individual in the capacity of a 11 benefit director shall constitute for all purposes an act or 12 inaction of that individual in the capacity of a director of 13 the benefit corporation. 14 5. Regardless of whether the articles of incorporation or 15 bylaws of a benefit corporation include a provision eliminating 16 or limiting the personal liability of a director authorized by 17 section 490.202, a benefit director is not personally liable 18 for an act or omission in the director’s capacity as a benefit 19 director unless the act or omission constitutes self-dealing, 20 willful misconduct, or a knowing violation of law. 21 6. a. The articles of incorporation, bylaws, or a 22 shareholder agreement under section 490.732 of a benefit 23 corporation shall provide that the persons who perform the 24 duties of the board of directors include a person with the 25 powers, duties, rights, and immunities of a benefit director if 26 the articles of incorporation, bylaws, or shareholder agreement 27 provides that the powers and duties conferred or imposed upon 28 the board of directors may be exercised or performed by a 29 person other than the directors. 30 b. A person that exercises one or more of the powers, 31 duties, or rights of a benefit director under paragraph “a” is 32 subject to all of the following: 33 (1) Is not required to be independent of the benefit 34 corporation. 35 -10- LSB 1185HH (6) 85 da/nh 10/ 19

H.F. 288 (2) Has the immunities of a benefit director. 1 (3) May share the powers, duties, and rights of a benefit 2 director with one or more other persons. 3 (4) Shall not be subject to the procedures for election or 4 removal of directors as provided in chapter 490, division VIII, 5 part A, unless any of the following applies: 6 (a) The person is also a director of the benefit 7 corporation. 8 (b) The articles of incorporation, bylaws, or a shareholder 9 agreement make those procedures applicable. 10 Sec. 10. NEW SECTION . 490B.303 Standard of conduct for 11 officers. 12 1. Each officer of a benefit corporation shall consider the 13 interests and factors described in section 490B.301, subsection 14 1, in the manner provided in that subsection if all of the 15 following apply: 16 a. The officer has discretion to act with respect to a 17 matter. 18 b. It reasonably appears to the officer that the matter 19 may have a material effect on the creation by the benefit 20 corporation of its general public benefit or a specific public 21 benefit as provided in section 490B.201. 22 2. The consideration of the best interests of the benefit 23 corporation in the manner described in subsection 1 shall not 24 constitute a violation of section 490.842. 25 3. Except as provided in the articles of incorporation or 26 bylaws of a benefit corporation, an officer is not personally 27 liable for monetary damages for any of the following: 28 a. An action or inaction as an officer in the course of 29 performing the duties of an officer under subsection 1 if the 30 officer performed the duties of the position in compliance with 31 section 490.842 and this section. 32 b. The failure of the benefit corporation to pursue or 33 create its general public benefit or a specific public benefit 34 as provided in section 490B.201. 35 -11- LSB 1185HH (6) 85 da/nh 11/ 19

H.F. 288 4. An officer does not have a duty to a person who is 1 a beneficiary of the general public benefit or a specific 2 public benefit of the benefit corporation, as provided in 3 section 490B.201, arising from the status of the person as a 4 beneficiary. 5 5. An officer who makes a business judgment in good faith 6 fulfills the duty under this section if all of the following 7 apply: 8 a. The officer is not interested in the subject of the 9 business judgment. 10 b. The officer is informed with respect to the subject of 11 the business judgment to the extent the officer reasonably 12 believes to be appropriate under the circumstances. 13 c. The officer rationally believes that the business 14 judgment is in the best interests of the benefit corporation. 15 Sec. 11. NEW SECTION . 490B.304 Benefit officer. 16 1. A benefit corporation may have an officer designated as 17 the benefit officer. 18 2. a. A benefit officer shall have the powers and duties 19 relating to the purpose of the corporation to create a general 20 public benefit or a specific public benefit as provided in 21 section 490B.201, if authorized by any of the following: 22 (1) The articles of incorporation or bylaws of the benefit 23 corporation. 24 (2) Absent any controlling provisions in the articles 25 of incorporation or bylaws of the benefit corporation, by 26 resolution or order of the benefit corporation’s board of 27 directors. 28 b. A benefit officer shall have the duty to prepare the 29 benefit report required by section 490B.401. 30 Sec. 12. NEW SECTION . 490B.304A Benefit officers and 31 directors —— criteria for independence. 32 1. Serving as a benefit director or benefit officer 33 shall not alone affect whether an individual is or is not 34 independent. 35 -12- LSB 1185HH (6) 85 da/nh 12/ 19

H.F. 288 2. A material relationship between an individual and a 1 benefit corporation or any of its subsidiaries is conclusively 2 presumed to exist if any of the following apply: 3 a. The individual is, or has been within the last three 4 years, an employee other than a benefit officer of the benefit 5 corporation or a subsidiary. 6 b. An immediate family member of the individual is, or 7 has been within the last three years, an executive officer 8 other than a benefit officer of the benefit corporation or a 9 subsidiary. 10 c. There is beneficial or record ownership of five percent 11 or more of the outstanding shares of the benefit corporation, 12 calculated as if all outstanding rights to acquire equity 13 interests in the benefit corporation had been exercised, by any 14 of the following: 15 (1) The individual. 16 (2) An entity if any of the following apply: 17 (a) The individual is a director, an officer, or a manager 18 of the entity. 19 (b) The individual owns beneficially or of record five 20 percent or more of the entity’s outstanding equity interests, 21 calculated as if all outstanding rights to acquire equity 22 interests in the entity had been exercised. 23 Sec. 13. NEW SECTION . 490B.305 Right of action —— benefit 24 enforcement proceedings. 25 1. a. Except in a benefit enforcement proceeding, a person 26 shall not bring an action or assert a claim against a benefit 27 corporation or its directors or officers with respect to any 28 of the following: 29 (1) The failure of the benefit corporation to pursue or 30 create a general public benefit or a specific public benefit 31 as set forth in its articles of incorporation as provided in 32 section 490B.201. 33 (2) A violation of an obligation, duty, or standard of 34 conduct under this chapter. 35 -13- LSB 1185HH (6) 85 da/nh 13/ 19

H.F. 288 b. A benefit corporation shall not be liable for monetary 1 damages under this chapter for any failure of the benefit 2 corporation to pursue or create a general public benefit or a 3 specific public benefit as provided in section 490B.201. 4 2. A benefit enforcement proceeding may be commenced or 5 maintained only as follows: 6 a. Directly by the benefit corporation. 7 b. Derivatively, in accordance with chapter 490, division 8 VII, part D by any of the following: 9 (1) A person or group of persons that owns beneficially or 10 of record at least two percent of the total number of shares 11 of all classes and series outstanding on the date of the 12 complained of action or inaction. 13 (2) A director of the benefit corporation. 14 (3) A person or group of persons that owns beneficially 15 or of record five percent or more of the outstanding equity 16 interests in an entity of which the benefit corporation is a 17 subsidiary on the date of the complained of action or inaction. 18 (4) Any other person or group of persons as specified in the 19 articles of incorporation or bylaws of the benefit corporation. 20 3. For purposes of this section, a person is the beneficial 21 owner of shares or equity interests if the shares or equity 22 interests are held in a voting trust or by a nominee on behalf 23 of the beneficial owner. 24 SUBCHAPTER IV 25 TRANSPARENCY 26 Sec. 14. NEW SECTION . 490B.401 Preparation of annual 27 benefit report. 28 1. A benefit corporation shall prepare an annual benefit 29 report which shall include at least all of the following: 30 a. A narrative description of all of the following: 31 (1) The ways in which the benefit corporation pursued or 32 created a general public benefit. 33 (2) The ways in which the benefit corporation pursued 34 or created a specific public benefit, as provided in section 35 -14- LSB 1185HH (6) 85 da/nh 14/ 19

H.F. 288 490B.201, to the extent that the specific public benefit is 1 stated in the benefit corporation’s articles of incorporation. 2 (3) Any circumstances that have hindered the pursuit or 3 creation of a general public benefit or a specific public 4 benefit as provided in section 490B.201. 5 (4) The process and rationale for selecting or changing the 6 third-party standard used to prepare the benefit report. 7 b. An assessment of the overall social or environmental 8 performance of the benefit corporation against a third-party 9 standard that is all of the following: 10 (1) Applied consistently with any application of the 11 third-party standard in prior benefit reports. 12 (2) Accompanied by an explanation of the reasons for any of 13 the following: 14 (a) Inconsistent application. 15 (b) A change to the third-party standard from the standard 16 used in the immediately prior report. 17 c. The name of the benefit director and the benefit officer, 18 if any, and the address to which correspondence to each of them 19 may be directed. 20 d. The compensation paid by the benefit corporation, during 21 the year, to each director in the capacity of a director. 22 e. The opinion of the benefit director described in section 23 490B.302, subsection 3. 24 f. A statement of any connection between the organization 25 that established the third-party standard, or its directors, 26 officers, or any holder of five percent or more of the 27 governance interests in the organization, and the benefit 28 corporation or its directors, officers, or any holder of five 29 percent or more of the outstanding shares of the benefit 30 corporation, including any financial or governance relationship 31 which might materially affect the credibility of the use of the 32 third-party standard. 33 g. If the benefit corporation has dispensed with, or 34 restricted the discretion or powers of, the board of directors, 35 -15- LSB 1185HH (6) 85 da/nh 15/ 19

H.F. 288 a description of all of the following: 1 (1) Each person who exercises the powers, duties, and rights 2 of the benefit corporation and who has the immunities of the 3 board of directors. 4 (2) The person who is designated as a benefit director or 5 who exercises the powers and duties of a benefit director as 6 required by section 490B.302. 7 2. If, during the year covered by a benefit report, 8 a benefit director resigned from or refused to stand for 9 reelection to the position of benefit director, or was removed 10 from the position of benefit director, and the benefit director 11 furnished the benefit corporation with written correspondence 12 concerning the circumstances surrounding the resignation, 13 refusal, or removal, the benefit report shall include that 14 correspondence as an exhibit. 15 3. Neither the benefit report nor the assessment of the 16 performance of the benefit corporation in the benefit report 17 required by subsection 1, paragraph “b” , is required to be 18 audited or certified by a third party. 19 Sec. 15. NEW SECTION . 490B.402 Availability of annual 20 benefit report —— filing —— fee. 21 1. A benefit corporation shall send its annual benefit 22 report to each shareholder on the earlier of any of the 23 following: 24 a. One hundred twenty days following the end of the fiscal 25 year of the benefit corporation. 26 b. The date that the benefit corporation delivers any other 27 annual report to its shareholders. 28 2. A benefit corporation shall post all of its benefit 29 reports on the public portion of its internet site, if any. 30 However, the compensation paid to directors and financial or 31 proprietary information included in a benefit report required 32 pursuant to section 490B.401 may be omitted from the benefit 33 reports as posted. 34 3. a. Concurrently with the delivery of the benefit report 35 -16- LSB 1185HH (6) 85 da/nh 16/ 19

H.F. 288 to shareholders under subsection 1, the benefit corporation 1 shall deliver a copy of the benefit report to the secretary 2 of state for filing. However, the compensation paid to 3 directors and financial or proprietary information included in 4 the benefit report may be omitted from the benefit report as 5 delivered to the secretary of state. 6 b. The secretary of state may impose and collect a fee of 7 not more than ten dollars for filing a benefit report. 8 EXPLANATION 9 GENERAL. This bill allows a business corporation to 10 incorporate and operate as a benefit corporation, generally 11 subject to the Iowa business corporation Act (Code chapter 490) 12 except as provided in the bill’s new Code chapter (Code chapter 13 490B). 14 ELECTION TO ATTAIN OR TERMINATE BENEFIT CORPORATION STATUS. 15 The bill provides that a business corporation attains or 16 terminates its status as a benefit corporation by shareholder 17 election. The election must be by an affirmative vote of 18 at least two-thirds of each of the corporation’s classes of 19 shareholders, or a higher vote threshold if required in its 20 articles of incorporation (referred to as a “minimum status 21 vote”). 22 ARTICLES OF INCORPORATION. The bill provides that a benefit 23 corporation’s articles of incorporation must have as a purpose 24 the creation of a general public benefit which provides some 25 material positive impact on society or the environment as 26 assessed against a third-party standard. The bill provides 27 that a benefit corporation’s articles of incorporation may 28 list one or more specific public purposes, including providing 29 low-income or underserved individuals or communities with 30 beneficial products or services, promoting economic opportunity 31 beyond the creation of jobs in the normal course of business, 32 preserving the environment, improving human health, promoting 33 the arts or sciences, or increasing the flow of capital to 34 entities with a public benefit purpose. 35 -17- LSB 1185HH (6) 85 da/nh 17/ 19

H.F. 288 BOARD ACTION. The bill requires a benefit corporation’s 1 board of directors, in addition to its fiduciary duty to make 2 decisions based on financial interests, to also consider 3 factors associated with creating a general public benefit or 4 furthering a specific public benefit, or other beneficial 5 goal. The bill requires the board of directors to consider 6 the effects of its actions upon its shareholders, employees, 7 and workforce; subsidiaries and suppliers; customers as 8 beneficiaries of the general or specific public benefit 9 purposes; the impacts upon the community; the local and global 10 environment; and the short-term and long-term interests of the 11 benefit corporation. The bill limits a director’s personal 12 liability due to any failure of the benefit corporation to 13 accomplish a general or specific public benefit purpose. 14 LEGAL ACTIONS. The bill prohibits a person from bringing an 15 action against a benefit corporation or its directors, except 16 in a benefit enforcement proceeding. A benefit enforcement 17 proceeding can only be commenced by the benefit corporation 18 or derivatively by a person or group that holds shares in 19 the corporation or an equity interest in the corporation, by 20 a director, or by any other person or group provided in the 21 articles of incorporation. 22 BENEFIT DIRECTOR AND OFFICER. The bill requires a public 23 corporation’s board of directors to include a benefit director. 24 A privately held benefit corporation’s board may include 25 such director. Such director must be independent, having 26 no material relationship with the benefit corporation. The 27 bill provides that a benefit corporation may have a benefit 28 officer who is charged with overseeing the creation of the 29 corporation’s general public benefit or a specific public 30 benefit. 31 REPORT. The bill requires a benefit corporation to prepare 32 an annual benefit report to its shareholders. The report is 33 to be prepared by its benefit officer, if it has one. The 34 report must include the process and rationale for selecting a 35 -18- LSB 1185HH (6) 85 da/nh 18/ 19

H.F. 288 third-party standard used to prepare the benefit report, the 1 ways in which the benefit corporation pursued its general and 2 specific public benefits, any circumstances that hindered the 3 creation of a general or specific public benefit, an assessment 4 of the overall social or environmental performance of the 5 benefit corporation prepared in accordance with a third-party 6 standard, and a statement prepared by the benefit director 7 indicating whether the benefit corporation pursued its general 8 or any specific public benefit purpose. The bill also requires 9 the benefit corporation to file the benefit report with the 10 secretary of state and pay the secretary of state a filing fee. 11 -19- LSB 1185HH (6) 85 da/nh 19/ 19