establish public benefit corporations in South Dakota.

26.598.17 101st Legislative Session 1154

2026 South Dakota Legislature
House Bill 1154

Introduced by: Representative Muckey

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An Act to establish public benefit corporations in South Dakota. 1
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 2
Section 1. That a NEW SECTION be added to a NEW CHAPTER in title 47: 3
This chapter, together with chapter 47-1A, applies to any public benefit 4
corporation, as defined in section 2 of this Act. If a corporation elects to become a public 5
benefit corporation under this chapter, the corporation is subject in all respects to the 6
requirements of chapter 47-1A, except to the extent this chapter imposes conflicting 7
requirements, in which case the requirements of this chapter supersede. 8
Section 2. That a NEW SECTION be added to a NEW CHAPTER in title 47: 9
Terms used in this chapter mean: 10
(1) "General benefit corporation," a public benefit corporation with articles of 11
incorporation that expressly provide for a general public benefit purpose; 12
(2) "General public benefit," a public benefit that is: 13
(a) Intended to impact society, the environment, or the well -being of present 14
and future generations; and 15
(b) Not directed to any specific community, interest, or person; 16
(3) "Independent," having no material relationship with a public benefit corporation or 17
a parent, subsidiary, or other affiliate of a public benefit corporation; 18
(4) "Minimum status vote," a shareholder election in which a corporation takes action 19
by the affirmative vote of the holders of at least two -thirds of the corporation's 20
issued and outstanding shares; 21
(5) "Organization," a domestic or foreign business or nonprofit corporation, limited 22
liability company, partnership, limited partnership, joint venture, association, trust, 23
estate, enterprise, or other legal or commercial entity; 24
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(6) "Public benefit," a positive effect, or reduction of a negative effect, on one or more 1
categories of communities, interests, or persons, other than stockholders in their 2
capacities as stockholders, of an artistic, charitable, cultural, economic, 3
educational, environmental, literary, medical, religious, scientific, or technological 4
nature; 5
(7) "Public benefit corporation," a for-profit corporation that is organized under chapter 6
47-1A, subject to the requirements of chapter 47-1A to the extent described in 7
section 1 of this Act, and intended to produce a public benefit; 8
(8) "Specific benefit corporation," a public benefit corporation with articles of 9
incorporation that expressly provide for only a specific public benefit purpose; 10
(9) "Specific public benefit," a public benefit directed to a specific community, interest, 11
or person; and 12
(10) "Third-party standard," a guideline that is: 13
(a) Publicly available; 14
(b) Used for assessing, defining, and reporting the performance of a business 15
enterprise as a public benefit corporation; and 16
(c) Promulgated by a neutral person operating independently of the 17
corporation. 18
Section 3. That a NEW SECTION be added to a NEW CHAPTER in title 47: 19
A public benefit corporation's articles of incorporation must state that the 20
corporation has made one of the following elections: 21
(1) To pursue only a general public benefit purpose; 22
(2) To pursue only a specific public benefit purpose; or 23
(3) To pursue both a general public benefit purpose and a specific public benefit 24
purpose. 25
The name of a general benefit corporation must contain the words "general benefit 26
corporation" or the abbreviation "GBC," and the name of a specific benefit corporation 27
must contain the words "specific benefit corporation" or the abbreviation "SBC." 28
Section 4. That a NEW SECTION be added to a NEW CHAPTER in title 47: 29
An existing corporation formed and acting under the requirements of chapter 47-30
1A may elect to become a public benefit corporation under this chapter upon approval by 31
a minimum status vote and the amendment of the corporation's articles of incorporation 32
to ensure compliance with section 3 of this Act. 33
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If an organization, other than a nonprofit corporation or domestic nonprofit 1
corporation as defined in § 47-1A-140, which is not a public benefit corporation, is a party 2
to a merger, exchange, conversion, or transfer pursuant to the requirements of chapter 3
47-1A, and the surviving organization in the merger, the acquiring organization in the 4
exchange, the converted organization in the conversion, or the transferee in the transfer 5
is to be a public benefit corporation, the transfer or the plan of merger, exchange, or 6
conversion must be adopted pursuant to the requirements of chapter 47-1A upon approval 7
by a minimum status vote. 8
Any shareholder of the merging, exchanging, converting, or transferring 9
corporation, or member of a similarly situated limited liability company, may dissent from 10
the merger, exchange, conversion, or transfer and obtain payment for the fair value of 11
the shareholder's shares or the member's membership interest pursuant to §§ 47-1A-12
1301 to 47-1A-1331.2, inclusive, in the event of an election of public benefit corporation 13
status pursuant to this section. 14
Section 5. That a NEW SECTION be added to a NEW CHAPTER in title 47: 15
An existing corporation formed and acting under the requirements of chapter 47-16
1A may elect to terminate the corporation's status as a public benefit corporation and 17
cease being subject to this chapter upon approval by a minimum status vote and the 18
amendment of the corporation's articles of incorporation to change the name of the 19
corporation and remove the statement of election required by section 3 of this Act. 20
Any shareholder of the corporation may dissent from and obtain payment for the 21
fair value of the shareholder's shares pursuant to §§ 47-1A-1301 to 47-1A-1331.2, 22
inclusive, in the event of a termination of public benefit corporation status pursuant to this 23
section. 24
Any corporation that terminates the public benefit corporation status, or has the 25
status revoked more than once pursuant to section 8 or 9 of this Act, may not elect to 26
become a public benefit corporation under this chapter until three years have passed since 27
the effective date of the termination or revocation. 28
Section 6. That a NEW SECTION be added to a NEW CHAPTER in title 47: 29
The board of directors shall manage or direct the business and affairs of the public 30
benefit corporation in a manner that balances the pecuniary interests of the stockholders, 31
the best interests of those materially affected by the corporation's conduct, and the public 32
benefit identified in the corporation's articles of incorporation. 33
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The conduct and liability of a director of a public benefit corporation is subject to 1
§§ 47-1A-830 and 47-1A-831. The director does not, by virtue of the public benefit 2
requirements of this chapter, owe any duty to any person solely by reason of the person's 3
interest in a public benefit identified in the corporation's articles of incorporation or any 4
interest materially affected by the corporation's conduct. With respect to a decision 5
implicating the balance requirement in this section, the director is deemed to satisfy the 6
director’s fiduciary duties to stockholders and the corporation if the director’s decision is 7
disinterested, informed, and made objectively. 8
The director's ownership of or other interest in the stock of the corporation does 9
not by itself create a conflict of interest on the part of the director, unless the interest 10
would create a conflict of interest if the corporation were not a public benefit corporation. 11
In the absence of a conflict of interest or action prohibited by § 47-1A-830 or 47-1A-831, 12
any act, conduct, or omission of the director does not constitute bad faith or a breach of 13
the director's duty of loyalty, unless otherwise provided in the articles of incorporation. 14
Section 7. That a NEW SECTION be added to a NEW CHAPTER in title 47: 15
Any shareholder of a public benefit corporation may assert a claim, under this 16
chapter or chapter 47-1A, against the corporation or the corporation's directors or officers, 17
based upon the failure of the directors or officers to create or pursue a general public 18
benefit or a specific public benefit, as applicable. The corporation is not liable for monetary 19
damages under this chapter for any failure to create or pursue a general public benefit or 20
a specific public benefit. 21
In addition to the grounds for relief provided by § 47-1A-1430, a court may grant 22
relief under this chapter if: 23
(1) Any director or other person in control of the corporation has breached the duties 24
set forth in section 6 of this Act; or 25
(2) The corporation has, for a period of at least one year, failed to pursue: 26
(a) In the case of a general benefit corporation, a general public benefit purpose 27
or any specific public benefit purpose stated in the corporation's articles of 28
incorporation; or 29
(b) In the case of a specific benefit corporation, any specific public benefit 30
purpose stated in the corporation's articles of incorporation. 31
Section 8. That a NEW SECTION be added to a NEW CHAPTER in title 47: 32
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In an action under section 7 of this Act, a court may, in addition to granting any 1
other equitable relief the court deems just and reasonable under the circumstances: 2
(1) Order the termination of the corporation's status as a public benefit corporation; 3
(2) Remove one or more directors from the corporation's board of directors and 4
determine whether the vacancy is to be filled pursuant to § 47-1A-810 or by court 5
appointment, with a court appointee to serve only until a qualified successor is 6
elected by the shareholders at the next regular or special meeting of the 7
shareholders; or 8
(3) Appoint a receiver to the corporation to: 9
(a) Carry on the business and activities of the corporation in a manner 10
consistent with this chapter; or 11
(b) Conclude business operations, liquidate assets, pay creditors, and distribute 12
any remaining moneys to shareholders. 13
Section 9. That a NEW SECTION be added to a NEW CHAPTER in title 47: 14
Before April first of each year, a public benefit corporation shall deliver to the 15
secretary of state for filing, in the form and manner determined by the secretary, a benefit 16
report covering the prior calendar year and pay a fee of fifty dollars to the secretary. 17
If the corporation fails to file the report required by this section before April first of 18
any calendar year, the secretary must revoke the corporation's status as a public benefit 19
corporation under this chapter and must notify the corporation of the revocation. 20
If a corporation's status is revoked under this section, the corporation is not 21
entitled to any of the benefits afforded to a public benefit corporation under this chapter, 22
as of the date of the revocation, and must amend the articles of incorporation to reflect a 23
name compliant with § 47-1A-401, which does not include any of the public benefit 24
corporation designations provided for in section 3 of this Act. 25
Within thirty days of the revocation, the corporation may file an application for 26
reinstatement and pay a reinstatement fee of three hundred dollars. Upon receipt of the 27
completed application and fee, the secretary shall reinstate the corporation's status as a 28
public benefit corporation, as of the date of the revocation. 29
If the corporation's public benefit status is revoked: 30
(1) Due to the intentional failure to file an annual benefit report, any shareholder of 31
the corporation may obtain payment from the corporation for the fair value of the 32
shareholder's shares; and 33
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(2) If the corporation fails to change the corporate name as required in this section, 1
the corporation is subject to administrative dissolution pursuant to § 47-1A-1421. 2
Section 10. That a NEW SECTION be added to a NEW CHAPTER in title 47: 3
An annual benefit report, as required by section 9 of this Act, must: 4
(1) State the name of the corporation and the corporation's statement of election 5
pursuant to section 3 of this Act; 6
(2) Identify the third-party standard adopted and applied by the corporation; 7
(3) Describe, with reference to the third -party standard, the extent to which the 8
corporation created or pursued: 9
(a) A general public benefit, if applicable; and 10
(b) Any specific public benefit identified in the articles of incorporation, if 11
applicable; 12
(4) Describe any circumstances that hindered the corporation's creation or pursuit of 13
any applicable public benefit; 14
(5) If the corporation adopted and applied a third-party standard that is different from 15
the standard identified in the corporation's most recent prior report, explain the 16
change; 17
(6) If the third-party standard is the same standard identified in the corporation's most 18
recent prior report: 19
(a) State whether the third-party standard is being applied in the same manner 20
as described in the prior report; or 21
(b) If the third -party standard is being applied in a different manner than 22
described in the prior report, explain the differing application; 23
(7) Confirm that the corporation's board of directors has approved the report; 24
(8) Contain a certification by the corporation's chief executive officer stating that the 25
report is accurate and complete as of the date of certification; and 26
(9) Be signed by the chief executive officer no more than thirty days before the report 27
is delivered to the secretary of state for filing. 28
Section 11. This Act is effective beginning July 1, 2027. 29