san francisco police chief greg suhr and mission station captain bob moser for coming tonight. i really appreciate that. i just got a text from supervisor weiner who is also supposed to be with us this evening, but he is still in his land use committee meeting. before i read this, i was thinking about chuck and why are we doing this. a good example was a couple of weeks ago on the 10:00 news at 10:00, the lead story was pick pockets and how bars and nightclubs are fighting back. and amber lee was in the castro and she was up in north beach and down near union square and with the bars and the nightclubs, they were posting signs have been careful. keep your cell phones in your front pocket, just warning people how to take care of yourself.

as i'm watching this and as we're trying to get the story done, it's because of sergeant chuck limbert. he has come to meetings and warning people about this stuff. he is one of the few, first off, i got to thank captain suhr, police chief suhr, sorry, because you're the one who brought chuck to the mission to begin with when you were captain of mission station. it begins with the community policing. if there is a bogus $20, $100 bill, the merchants know about it. they tell chuck. chuck let's everybody else know about it. you don't get that with a lot of police officers, so you're awesome, chuck. [applause] >> so with this certificate of

honor, the small business commission of the city and county of san francisco recognizes sergeant chuck limbert of the san francisco police department on this monday, february 13, 2012, the small business commission is proud to acknowledge the contributions that sergeant chuck limbert of the san francisco police department has made to the san francisco small business community. as event coordinator admission station, sergeant limbert works closely with her chants in all of the mission, the mission, lower 24th street, castro, and other neighborhoods served by the station. community members are united in commemorating limbert for going above the call of duty and coming in on his days off to make sure that high profile events go off without a hitch. as sergeant limbert of the captain's staff, he sets new standards on community policing by working with local merchants

on issues such as checking credit card fraud, fake currencyy and other pertinent issues. the commission commends sergeant limbert for his work and thanks him for serving as an example of being a great city employee, not just for the police department, but for the entire city family as a whole. [applause] >> i want to thank the commission for recognizing chuck. that was a great story you told saying that when chuck knows something is amiss, he lets everybody know about it. when chuck knows anything, he lets anybody know about it. so it was my pleasure to have him admission station. he is fabulous. he does the best job making everybody feel at home. i mean, we talk about stats and crime numbers and all that, people are really as safe as they feel.

when you have police officers like chuck and captains like bob and commissioners like yourself, it makes it so much easier for all of us who live in san francisco to feel just as we should. thank you. [applause] >> i want to thank you all very much. i really appreciate this. i accept this on behalf of all of the police officers that do community policing. sometimes that's not recognized. we understand that small business is the backbone of san francisco and that's what we're here to support. so going out and establishing relationships underneath the direction of the chief of police as well as captain moser here, that really instills me to go out and do what i want to do best. that is talk to people, get to know them, and help the people of san francisco. so on behalf of everyone, i appreciate this offer in extending it to me and thank you so much. [applause]

>> need to be able to tweet it. >> thank you so much. [applause]

>> commissioners, the next item, item number 4, approval of the january 9, 2012, meeting minutes, explanatory documents draft january 9, 2012 meeting minutes. >> i move to approve. >> second. >> all in favor. >> aye. >> we'll take that as yes, ok. thank you. director which item do we want to go to next? >> move to item number six, the presentation or supervisor, would you like to do the presentation of your legislation or have the others do their presentation? >> that would be good. >> thank you, commissioners,

item siic trojian of b lab on benefitprest corporations of the state of california. this item is a discussion item and will be followed by a potential action item.

>> if i can give a slide show up, that will be great. there we go. good evening, my name is eric trojan, i am director of policy for blab. -- b-lab. our mission is to solve social and environmental problems. one of the things we do is go around and educate the public on issues. across the country, currently, seven states have enacted

benefit corporation legislation. there are eight states currently moving it forward. in california, some of the business associations that were supportive of the legislation's and advocated for it, january 3 was the first effective date for a company to have the option to incorporate as a benefit corporation or any other current corporate form. the purpose of benefit corporation is to provide protection for corporations to consider stakeholders. they have one duty, to maximize shareholder profit. the free-market approach was taken to alter that, where a company could choose to be a benefit corporation and it would voluntarily have the choice to consider other issues such as society and the environment in

addition to the shareholders. this provided the company's market distinction for being amongst the traditional corporations out there and help investors by identifying these new types of corporations. they could easily identify mission-oriented companies said they could apply mission- oriented capital to those companies. previously, as they invested in to a company, they claimed to have a particular mission. there is no recourse for the shareholder otherwise to sell his or her stock. the annual benefit report is produced not only for the shareholders, and i consider this a steak to work for doing these quantitative reports, the

financial documents. a qualitative report is produced for the shareholders, as well as the public, and that is one of the unique things. again, a voluntary choice on the company's party disclosed activities to the public. the three elements of benefit corporation legislation is a purpose, accountability, and transparency. previously, the sole purpose was to maximize shareholder value. now it is to produce a positive impact on the environment for benefit corporations. the accountability element, previously the directors were charged with a mission to maximize profits and they shall consider the effects on other stakeholders which are categorized as a society and the environment. the transparency element which is the production of an annual

benefit report, this is assessed against a third party standard. you choose any third party standard you want as long as it met the qualifications of the statute which is transparency, the ability for the public to comment on the works of a third party standard that is not being funded by the people that are using this standard. similarly, how we use accounting principles to produce the financial documents, there is no standardized method to produce qualitative reports. we didn't want to dictate which ones you had the use, so we require, again, as stated in the legislation what the qualifications for third-party standard are, the legislation allows the company to choose that as long as it meets those requirements. that way, we have clear and concise reports that the

investor can verify the information and the consumer can go back to a standardized methodology to consider the basis for those reports. one of the points of confusion that people get is that we certify companies being a certain level of social and environmental performance. it is different from the legislation that is called benefit corporation legislation. it is a certification conferred to any for-profit business entity. benefit corporations, the legal status administrative by the state as an alternative corporate form to the traditional corporate form. a benefit corporation does not have to be a certified

corporation. they can choose a number of third-party standards out there. we offer hours for free. there is numerous other ones, these are all potential standards. benefit corporation laws do not affect whether they are a c or an s corp. it has nothing to do with tax law. a certified the corporation must meet a certain high standard of social and environmental performance. again, and they don't have the legal protection of the statute that is offered under california law. they are still susceptible to a shareholder lawsuit. the benefit corporation provides the legal protection. and as mentioned, it can be any corporate form. a benefit corporation is a

corporation under the california corporate code. next, here are, as of january 3, i will have the associate who is a community development person going over the people here in california that have become benefit corporations and give examples of businesses. >> i am head of community development out of san francisco here for b-labs. the slide here is showing the overall depiction of the companies in california that became benefit corporations. the law took effect on january 3 of this year. on the official day of opening, 12 companies became benefit corporations. to give something back, green retirement plans, and there was a lot of press around this thanks to being part of this.

they have been a leader in this sort of business for a long time. and moving forward with retirement, they wanted to set up a structure where he knew his company would last another 50 years. there is the least for the benefit corporations from san francisco on the first day, a number of others from the bay area as well that makes a lot of sense, given the community that we have. just to give a couple quick overviews of what some of these companies are, the san francisco-based credit card processing competed against the paypals of the world, adding focused doing good in the social and environmental sense as well as making a profit. they were one of the original certified corporations and became a benefit corporation on the third of january.

over 40% of their expenditures are directed toward local suppliers. over 10% of their profits go back to charitable organizations, so they are doing a lot of interesting things beyond providing a great service and competing with some of the bigger companies out there. one more example for you here was to give something back. a long history of doing great things and moving beyond the model to have have had really good office supplies services across the area. his motivation for becoming a benefit corporation was that he knows he will be scaling at some point in the think this says it all. looking at this from an investor perspective, how does he get the trust that will maintain that mission? a lot of times in your original

shareholders are the ones aligned with you. he either move their shares to something else or it goes down in the family that might not have the same values as the original shareholder. really critical position to give something back and have a framework to protect them with their mission in the longer- term. i will move it back to eric, this is a listing on some of the third-party standards that have been recognized. >> you produce the annual benefit, you said that you don't have to be certified by a third- party, but you must use it as a rubric for production of the annual benefit report? here are some examples of third- party standards we feel that the qualification of the legislation, and there are numerous differences. they evaluated the social and the environmental qualifications of the company.

even great america that sound environmental, they look at the social and environmental aspects of the company as well. letters of support from great america regarding the legislation passed in california, that is pretty much yet. if there are any questions regarding the benefit corporation legislation, we would be happy to answer them. commissioner dwight: thank you for coming to present. i have some the familiar red with the movement -- familiarity with the movement. what makes a company b-corp? >> there are two different kinds of companies. a benefit corporation is the statutory entity that someone assumes when they file their corporation or amend their articles. they must produce a material of positive impact. an entity that is recognized by b-lab has to take an evaluation

test and be reviewed by our non-profits and is allowed to use that designation as a certified b-corporation. commissioner dwight: i presume that we are talking about a certified b-corp. >> no, benefit corporations. no, the legal entity benefit corporations. >> b-corporation in general during this legislation. commissioner dwight: 8 california benefit corporation is a certified b-corp? >> no. the california benefit corporation as a legal entity that has assumed the designation as a benefit corporation through the department of state. you can choose any third party standards to assess their annual benefit report against.

as indicated, that list is approximately what we feel meet the qualifications of the legislation, but it is up to the company to determine if they meet those qualifications. >> if the company is incorporated in delaware, there are quite a few on your list, can it become a california benefit corporation? >> absolutely. either before the senate whorehouse, i forget which one, they stated they can incorporate in california. new york just passed a benefit corporation legislation and the 13 companies became benefit corporations, and one left in delaware. that is one of the attractions california had for passing legislation, the enticement for companies to leave delaware and return home because these are

countries that are thinking sustainably, and they want to be incorporated in california. now this provides them an opportunity to do so because delaware has not done this at this point in time. commissioner dwight: and he will advise you -- [inaudible] >> you are seeing that this is bucking the trend, being incorporated in delaware doesn't do that. there are countries that are certified the corporations that are waiting for their state to produce a this legislation so that they can grow. as he just explained, it will give something back and they were fearful growing. if you and i are the sole

owners, to bring on an outside investor, as soon as we get one other investor, if he or she doesn't agree with us, we are susceptible to a shareholder lawsuit. now california has freed up that ability for socially minded and environmentally minded businesses to bring in investors and feel free that they are not going to be sued for the process. commissioner dwight: so do you have an assessment of what it costs to become ab b- corporation? >> a benefit corporation? commissioner dwight: you'll have to go through the process of changing the state, and there is a cost for may maintaining status.

>> it is using a third party standard with an assessment guidelines similar to how you use accounting principles. until you are required for it to be certified -- in new york, the 13 that incorporated there on friday, these are new york city prices, it was a hundred and $50 that they were charging to alter your articles of incorporation. commissioner dwight: i have never received a bill for less than $850. >> again, it is a very simple thing. it is a 2/3 vote by the shareholders. it basically paraphrases imf benefit corporation and your normal mission statement.

it is nothing beyond a simple amendment of your articles. commissioner riley: i have a question regarding the benefit corporations. they have to meet in order to qualify to be a benefit corporation? >> they are making a pledge that they are going to seek to produce a material positive impact on society and the environment. there is a current requirement for a corporation to maximize shareholder value. if they don't, the only people that have a right of action are the shareholders. you must produce a material positive impact, and the unique thing here in benefit

corporations, not only do the shareholders have the private right of action, but it is almost like a whistle-blower element. i have a right to go to court and have you rectify that. [inaudible] >> no, it is similar to a traditional corporation. now you have the mission and the purpose is to not create a material positive impact on society and the environment. i thought arid be some sort of -- commissioner riley: i thought there would be some sort of -- >> it is the shareholders that enforce the like the current corporations.

there is no other qualification needed and a requirement to maximize profit will be enforced by the shareholders themselves. commissioner riley: financial institutions have hot requirements. >> again, it would be a different kind of corporation, that is not applicable here. commissioner riley: anyone could apply to be of benefit corporation? >> correct. after that, they have to produce a material positive impact on the environment. commissioner riley: that there is the standard measure for that? gosh no, there is a third party standard that meets the definition of the legislation. they must measure that against using that third-party standard, so that as the transparency element. rather than simply having you write your own annual report,

you're using it against a third party standard of a valuation so that the consumer and the shareholder can see what you're doing. commissioner riley: is this a pretty new concept? >> yes, january 3 was the first application of this legislation. commissioner clyde: i want to thank you for your presentation, and i also want to say that i am glad to see that this creative, forward thinking energy is not going to be codified. i can see benefits for the organic food distributors, i concede benefits for people trying to develop community theaters. i can see that it has a very creative and open ended -- it is a creative and open-ended program, i