Rep. Tommy Stringer (R-Greer) sponsored the South Carolina Benefit Corporation Act that was signed into law by Gov. Nikki Haley.
The bill (H4766) brings more freedom to business in the south and creates a new class of corporation in South Carolina. It was signed into law last week. “Part of governing is finding a solution,” Stringer, District 18 representative, said. “I’m a conservative and we seem to have run out of solutions. I believe part of governing is finding a solution. I tried to be objective and adhere to a certain ideology.”
The legislation creates a new class of corporation in South Carolina called benefit corporations that are legally required to pursue the creation of a material positive impact on society and the environment, while meeting higher standards of accountability and transparency.
Current law requires corporations to prioritize the financial interests of shareholder over the interests of workers, communities, and the environment. Benefit corporation legislation not only gives businesses the freedom and legal protection to use business for a higher purpose than maximizing profits, but it gives individual citizens something positive for which to advocate.
“There is no tax benefit and this sends protection to the (corporate) board of directors addressing social needs or problems. When I was doing research for tax reform I came upon this and thought this would be great for South Carolina and get us ahead of the game,” Stringer said.
Benefit Corporations are identical to existing S.C. corporations except that a benefit corporation is required to: 1) have a corporate purpose to create a material positive impact on society and the environment; 2) expand fiduciary duty to require consideration of the interests of employees, community and the environment when making decisions; and 3) publicly report annually on its overall social and environmental performance using a comprehensive, credible, independent, and transparent third party standard.
“This also appeals to tech start-ups that corporations want to support. When (the start-ups) went public they were afraid their initiatives would not be protected,” Stringer said.
South Carolina and Louisiana enacted the legislation this month. They join New Jersey, Virginia, Hawaii, California, New York, Vermont and Maryland that have all passed similar legislation and Illinois, Pennsylvania, and North Carolina are moving forward. Legislation has received bi-partisan support in every state.
“By passing the South Carolina Benefit Corporation Act, we have joined the vanguard of states that are looking beyond government programs to solve our social problems,” Stringer said. “This inventive legislation will unleash the generosity of existing South Carolina businesses who wish to promote their commitment to corporate responsibility. Furthermore, this legislation enhances our ability to attract new businesses to our state that are willing to invest in our future. I appreciate the strong bi-partisan support and the support of Gov. Haley that allowed this legislation to become a reality.”