Exactly two years passed between the effective date of Delaware's benefit corporation statute and the recent amendments to that statute. These amendments made three significant changes to the law governing "Public Benefit Corporations" ("PBCs") in Delaware.
First, the amendments remove the requirement that PBCs include the phrase "public benefit corporation" in their names. However, if a PBC decides to omit those words from its name, the PBC must, before it issues shares, inform recipients of the shares that the company is in fact a PBC.
Second, the original statute required that ninety percent of all outstanding shares had to vote in approval before a company could change its corporate status to or from PBC. Under the amended law, this sort of change only requires the approval of two-thirds of the shares that are entitled to vote on the issue.
Third, although the original law provided appraisal rights for any shareholder of a company that changed its status to PBC, the amended law includes a new exception to appraisal rights. Under this exception, shareholders do not have appraisal rights when their shares are (1) listed on a national securities exchange or (2) held by more than 2000 shareholders. This "market out" exception parallels the exception provided in Delaware's statutory law governing traditional (i.e., non-PBC) corporations.
By removing the strict naming requirement, lowering the approval threshold for becoming a PBC, and bringing appraisal rights in line with Delaware's law governing traditional corporations, Delaware's legislature seems to be indicating an increased level of comfort with the concept of benefit corporations. In all likelihood, Delaware's comfort level will spread to other states' legislative bodies. Should that occur, Smith Moore Leatherwood's "B Team" will be on top of it.