Hobby Lobby And Other Constituency Statutes


Is the corporate form incompatible with religious beliefs?  California Attorney General Kamala Harris thinks so.  In this amicus brief filed in Sebelius v. Hobby Lobby Stores, Inc., U.S. Supreme Court Docket No. 13-354, she asserts:

Practically, the notion that a corporation may exercise religion would pose a number of challenges to federal and state governments and courts.

As I pointed out in this post, this assertion is at odds with California law, which has for decades explicitly permitted the formation of nonprofit religious corporations.  Moreover, the enactment of California’s Corporate Flexibility Act of 2011, Cal. Corp. Code § 2500 et seq., recognizes that for-profit flexible purpose corporations may have community and societal purposes.  In addition, Marc Greendorfer argues in this recent paper: “a corporation organized as a B-Corp [benefit corporation] can be religious and formed for purposes other than the sole pursuit of profit.”

The California General Corporation Law does not expressly authorize directors to consider other constituencies.  However, many states have enacted such “other constituency” statutes.  Nevada, for example, allows directors in exercising their respective powers with a view to the interests of the corporation to consider:

  • The interests of the corporation’s employees, suppliers, creditors and customers;
  • The economy of the State and Nation;
  • The interests of the community and of society; and
  • The long-term as well as short-term interests of the corporation and its stockholders, including the possibility that these interests may be best served by the continued independence of the corporation.

NRS 78.138(4).

While it is true that NRS 78.138(4) does not mention religious interests per se, the interests of the community and of society could encompass religious interests.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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