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HomeCorporations CodeCh. 3§ 14620 Director Duties Benefit Corporation

§ 14620 Director Duties Benefit Corporation

Corporations Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 14620 Director Duties Benefit Corporation

This law says that directors of a benefit corporation must make decisions that are good for the company and think about how their choices affect everyone involved, like workers, customers, and the environment.

Key Takeaways

  • •Directors must make decisions that are good for the company and everyone involved.
  • •They have to think about workers, customers, the community, and the environment.
  • •Directors can rely on information from experts, like accountants or lawyers, to help them make decisions.
  • •Directors are not personally responsible if the company fails to create a public benefit.

Example

A company wants to build a new factory. The directors have to think about how this will affect the workers, the people living nearby, and the environment, not just how much money the company will make.

The directors can't just think about making money. They have to consider if the factory will pollute the air, if it will give jobs to people, and if it will help the community.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 14620 Director Duties Benefit Corporation

(a) A director shall perform the duties of a director including duties as a member of any committee of the board upon which the director may serve, in good faith, in a manner the director believes to be in the best interests of the benefit corporation and with that care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. (b) In discharging their respective duties, and in considering the best interests of the benefit corporation, the board of directors, committees of the board, and individual directors of a benefit corporation shall consider the impacts of any action or proposed action upon all of the following: (1) The shareholders of the benefit corporation. (2) The employees and workforce of the benefit corporation and its subsidiaries and suppliers. (3) The interests of customers of the benefit corporation as beneficiaries of the general or specific public benefit purposes of the benefit corporation. (4) Community and societal considerations, including those of any community in which offices or facilities of the benefit corporation or its subsidiaries or suppliers are located. (5) The local and global environment. (6) The short-term and long-term interests of the benefit corporation, including benefits that may accrue to the benefit corporation from its long-term plans and the possibility that these interests may be best served by retaining control of the benefit corporation rather than selling or transferring control to another entity. (7) The ability of the benefit corporation to accomplish its general, and any specific, public benefit purpose. (c) In discharging their respective duties, the persons described in subdivision (b) may consider any of the following: (1) The resources, intent, and conduct, including past, stated, and potential conduct, of any person seeking to acquire control of the corporation. (2) Any other pertinent factors or the interests of any other person or group. (d) In discharging their respective duties, the persons described in subdivision (a) shall not be required to give priority to any particular factor or the interests of any particular person or group referred to in subdivision (b) or (c) over any other factor or the interests of any other person or group unless the benefit corporation has stated its intention to give priority to a specific public benefit purpose identified in the articles. (e) In performing the duties of a director, a director shall be entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by any of the following: (1) One or more officers or employees of the benefit corporation whom the director believes to be reliable and competent in the matters presented. (2) Counsel, independent accountants, or other persons as to matters that the director believes to be within those persons’ professional or expert competence. (3) A committee of the board upon which the director does not serve, as to matters within its designated authority, which committee the director believes to merit confidence, so long as, in any of those cases, the director acts in good faith, after reasonable inquiry when the need therefor is indicated by the circumstances and without knowledge that would cause that reliance to be unwarranted. (f) A director shall not be liable for monetary damages under this part for any failure of the benefit corporation to create a general or specific public benefit. (g) A person who performs the duties of a director in accordance with this part shall not be liable for monetary damages for any alleged failure to discharge the person’s obligations as a director. (h) In addition to the limitations provided in subdivisions (f) and (g), the liability of a director for monetary damages may be eliminated or limited in a benefit corporation’s articles to the extent provided in paragraph (10) of subdivision (a) of Section 204. (i) A director shall not have a fiduciary duty to a person that is a beneficiary of the general or specific public benefit purposes of a benefit corporation arising from the status of the person as a beneficiary. (j) A director of a foreign corporation that is subject to Section 2115 shall not be subject to Section 309 and shall be subject instead to this section if the director of the foreign corporation is subject to duties under its articles of incorporation, bylaws, or the law of its jurisdiction of incorporation similar to the duties of directors under this section. (Added by Stats. 2011, Ch. 728, Sec. 1. (AB 361) Effective January 1, 2012.)

Last verified: January 10, 2026

Key Terms

corporationshareholderdirectorconsiderationemployeebenefitscommunityenvironment

Related Statutes

  • § 2702 Agent Indemnification Expenses
  • § 12313 Optional Corporate Articles Provisions
  • § 12371 Director Duties And Reliance
  • § 12377 Corporate Agent Indemnification Rules
  • § 12620 Involuntary Dissolution Complaint

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Corporations Code. Section 14620.
View Official Source