2019 -- S 0395

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LC002010

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO BUSINESSES AND PROFESSIONS

     

     Introduced By: Senators Seveney, DiPalma, Coyne, and Euer

     Date Introduced: February 27, 2019

     Referred To: Senate Commerce

     It is enacted by the General Assembly as follows:

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     SECTION 1. Title 5 of the General Laws entitled "BUSINESSES AND PROFESSIONS"

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is hereby amended by adding thereto the following chapter:

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CHAPTER 89

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TRANSPARENCY AND SUSTAINABILITY STANDARDS FOR RHODE ISLAND

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BUSINESSES ACT

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     5-89-1. Purpose.

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     The purpose of this chapter is to support Rhode Island business entities in their global

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sustainability efforts by providing this enabling legislation that permits a Rhode Island entity to

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signal its commitment to global sustainability. This chapter does not purport to prescribe which

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sustainability standards an entity chooses to adopt. Thus, a Rhode Island entity is free to choose

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standards promulgated or developed by any entity.

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     5-89-2. Legislative findings.

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     The legislature finds that:

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     (1) The state of Rhode Island is committed to initiatives designed to support

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sustainability practices by providing a platform for manufacturers and businesses to demonstrate

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their corporate commitment to social responsibility and sustainability.

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     (2) In recognition of the increasing interest from investors, customers and employees for

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greater transparency in sustainability practices, this legislation provides Rhode Island businesses

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a means to demonstrate to their customers, investors, and employees that they are committed to

 

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sustainability that embodies business practices and systems that are designed to foster innovation

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and long-term profits as well as environmental and societal benefits.

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     (3) Rhode Island's program shall be implemented by way of voluntary enabling

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legislation and applies only to those who seek to become certified as reporting entities. There is

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no single blueprint for best practices in sustainability among or within industries, and this

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legislation shall allow businesses to craft a sustainability blueprint that meets their specific needs

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provided that the entity's governing body approves its standards and assessment measures and

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that they are made publicly available.

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     5-89-3. Definitions.

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     As used in this chapter only, the following terms shall have the following meanings:

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     (1) "Acknowledged" means with respect to any document or instrument required to be

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executed by an authorized person pursuant to this chapter, the authorized person executing such

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document or instrument has certified, under penalty of perjury, that the information set forth in

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such document or instrument is accurate and complete to the best of such authorized person's

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actual knowledge after due inquiry.

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     (2) "Assessment measures" means with respect to any entity, the policies, procedures or

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practices adopted by such entity to adduce objective factual information to assess the entity's

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performance in meeting its standards, including any procedures for internal or external

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verification of such information.

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     (3) "Authorized person" means, with respect to any entity, any person or entity who has

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been duly authorized in accordance with the organizational documents of the entity and the laws

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of this state (whether statutory, common law or otherwise) under which the entity is incorporated,

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formed or organized to execute such documents and instruments and make such

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acknowledgments as are required by this chapter.

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     (4) "Certification of adoption of transparency and sustainability standards" means a

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certificate, issued by the secretary of state, attesting that a reporting entity has filed with the

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secretary of state a standards statement pursuant to this chapter. Such certificate shall state on its

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face that the state has not reviewed the contents or implementation of the matters referenced in

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the standards statement, nor verified any reports made by the reporting entity.

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     (5) "Control,'' including the terms "controlling,'' "controlled by'' and "under common

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control with,'' means the possession, directly or indirectly, of the power to direct or cause the

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direction of the management and policies of a person or entity, whether through the ownership of

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equity or other voting securities, by contract or otherwise.

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     (6) "Entity'' means any:

 

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     (i) Corporation (stock or nonstock), partnership (whether general (including a limited

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liability partnership) or limited (including a limited liability limited partnership)), limited liability

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company, or statutory trust validly existing under the applicable laws of this state; or

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     (ii) Any association of the kind commonly known as a joint-stock association or joint-

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stock company, and any unincorporated association, trust or other enterprise having members or

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having outstanding shares of stock or other evidences of financial or beneficial interest therein,

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the internal affairs of which are governed by the laws of this state and which has not otherwise

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been dissolved (whether voluntarily or by any order or decree of any court of competent

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jurisdiction) or otherwise terminated.

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     (7) "Governing body'' means the board of directors or equivalent governing body, person

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or entity having the power to manage and direct the business and affairs of the entity, and shall

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include any duly authorized and empowered committee of the board of directors or equivalent

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governing body.

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     (8) "Nonreporting entity'' means any person or entity (including any entity) that is not a

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reporting entity.

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     (9) "Organizational documents'' means the certificate of incorporation, bylaws,

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partnership agreement, limited liability company agreement, articles of association or other

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agreement, document or instrument containing the provisions by which an entity is formed or

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organized and by which its internal affairs are governed, in each case as amended, modified,

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supplemented and/or restated and in effect as of any date of determination.

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     (10) "Provider'' means, as to any entity, any third party that is engaged to provide

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professional consulting services or advice to assist entities or enterprises in measuring, managing

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or reporting the impact of their business and operations on issues of social and environmental

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impact.

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     (11) "Report'' means a report with respect to a reporting period for a reporting entity

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containing the following:

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     (i) A summary of the standards and assessment measures in effect during the applicable

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reporting period, which summary shall include the third-party criteria and any other source used

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to develop the entity's standards and assessment measures and the process by which they were

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identified, developed and approved by the entity;

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     (ii) A summary of the actions or activities by which the entity has sought to meet the

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standards during the applicable reporting period, including engagement with and disclosure to

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stakeholders, if any;

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     (iii) The most recent available objective and factual information developed pursuant to

 

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the assessment measures, if any, with respect to the entity's performance in meeting its standards

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during the reporting period, and an assessment by the governing body whether the entity has been

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successful in meeting the standards, and in the case of any failure to meet such standards, a

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summary of any additional efforts the governing body has determined the entity will undertake to

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improve its performance in respect thereof, or its determination not to undertake such additional

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efforts;

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     (iv)(A) The identity of any provider assisting the entity in measuring, managing or

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reporting the impact of the entity's business and operations in light of its standards; or

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     (B) A statement that the entity has not engaged the services of any provider for such

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purposes;

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     (v) A summary of any changes to the standards, assessment measures or reporting period,

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the process by which such changes were identified, developed and approved by the entity, and the

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third-party criteria used to develop any changes to the standards;

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     (vi) A summary of the actions or activities planned for the next succeeding reporting

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period with respect to measuring, managing and reporting with respect to the standards if such

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actions and activities are materially different from those described for the applicable reporting

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period; and

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     (vii) Notwithstanding the foregoing, no entity shall be required to include in any report

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any information that such entity determines in good faith is subject to an attorney-client or other

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applicable privilege or would result in the disclosure of trade secrets or other competitively

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sensitive information.

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     (12) "Reporting entity'' means an entity that has been issued a certificate of adoption of

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transparency and sustainability standards and that has not become and continues to be a

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nonreporting entity pursuant to § 5-89-6.

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     (13) "Reporting period'' means a period of one year, the initial such period to begin not

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more than one year following the filing of the standards statement, and subsequent reporting

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periods to begin on the day following the last date of the prior reporting period, unless a

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governing body elects to shorten the duration of a reporting period that has not begun in order to

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change the start date for subsequent reporting periods.

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     (14) "Standards'' means, with respect to an entity, the principles, guidelines or standards

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adopted by the entity to assess and report the impacts of its activities on society and the

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environment, which principles, guidelines or standards shall be based on or derived from third-

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party criteria.

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     (15) "Standards statement'' means the filing described in § 5-89-5.

 

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     (16) "Third party'' means, with respect to any entity, any person or entity other than any

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person or entity that controls, is controlled by or under common control with such entity,

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including any governmental or nongovernmental organization that provides services, standards,

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or criteria with respect to measuring, managing or reporting the social and environmental impact

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of businesses or other enterprises.

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     (17) "Third-party criteria'' means any principles, guidelines or standards developed and

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maintained by a third party (including a provider) that are used to assist businesses or other

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enterprises in measuring, managing or reporting the social and environmental impact of

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businesses or other entities.

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     5-89-4. Certificate of adoption of transparency and sustainability standards.

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     (a) The secretary of state shall issue a certificate of adoption of transparency and

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sustainability standards to any entity if the secretary of state shall have determined that the

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following conditions have been satisfied:

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     (1) Such entity shall have executed and acknowledged, and delivered to the secretary of

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state, a standards statement;

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     (2) Such entity shall have paid all fees and costs assessed by the secretary of state; and

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     (3) Such entity remains a reporting entity, and if such entity is registered or formed with

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the secretary of state, it is in good standing upon the records of the secretary of state.

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     (b) Each reporting entity shall, for all purposes of the laws of this state, be authorized and

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permitted to disclose, publicly or privately, that it is a reporting entity.

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     (c) The secretary of state is hereby authorized to promulgate rules and regulations

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necessary to implement this chapter and shall issue any such certificate required pursuant to this

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chapter and shall further be permitted to charge a reasonable fee for any certificates issued and /or

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renewed.

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     5-89-5. Statement of adoption of transparency and sustainability standards.

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     If the governing body of an entity has adopted resolutions setting forth the entity's

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standards and assessment measures, the entity may file a standards statement that:

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     (1) Acknowledges that the governing body of the entity has adopted resolutions setting

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forth the entity's standards and assessment measures;

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     (2) Identifies an Internet link on the principal website maintained by or on behalf of the

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entity at which the standards and assessment measures, the third-party criteria used to develop the

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standards, a description of the process by which such standards were identified, developed and

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approved and any report filed or to be filed by the entity are and will be readily available at no

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cost and without the requirement of the provision of any information, and will remain available

 

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for so long as the entity remains a reporting entity (the "website'');

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     (3) Acknowledges that the entity has agreed to acknowledge and deliver to the secretary

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of state, within thirty (30) days after a request therefor by the secretary of state, its most recent

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report;

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     (4) Acknowledges that the entity has committed to:

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     (i) Use the assessment measures to assess the entity's performance in meeting its

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standards;

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     (ii) Review and assess its standards and assessment measures from time to time, and

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make such changes thereto as the governing body in good faith determines are necessary or

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advisable in furtherance of meeting the entity's standards;

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     (iii) Prepare and make readily available to the public at no cost and without the

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requirement of the provision of any information (by posting on the website at the identified

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Internet link) a copy of its report within ninety (90) days of the end of each reporting period;

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     (5) Sets forth the address within the state to which the secretary of state shall mail any

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notices; and

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     (6) Is acknowledged by an authorized person.

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     5-89-6. Reporting entity status - Renewal statement.

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     (a) A renewal statement shall be submitted to the secretary of state between October 1

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and December 31 of each year. A reporting entity shall become a nonreporting entity on January

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1 of the following year if the reporting entity shall have failed to submit the renewal statement to

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the secretary of state in accordance with this chapter without the need for further action by the

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secretary of state. A reporting entity's renewal statement shall:

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     (1) Acknowledge that any changes since its most recent filing of a renewal statement or

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restoration statement, or, if no renewal statement or restoration statement has been filed, since the

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filing of its standards statement, to its address within the state or standards and assessment

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measures, and a description of the process by which such changes were identified, developed and

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approved by the entity and the third-party criteria used to develop any changes to the standards

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are available on the website;

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     (2) Acknowledge that, for the most recent reporting period for which a report was

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required to be made available on or prior to October 1, if any, a report was made available on the

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website in accordance with this chapter within the time period provided for in § 5-89-5(4)(iii);

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     (3) Provide an Internet link to the report for the most recent reporting period, if any, on

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the website;

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     (4) Be acknowledged by an authorized person.

 

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     (b) No standards statement shall be accepted by the secretary of state for an entity if it has

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become a nonreporting entity pursuant to subsection (a) of this section within the prior year.

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     (c) On or before September 1 of each year, the secretary of state shall mail to each

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reporting entity at its address as specified in § 5-89-5(5), a notice specifying that the renewal

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statement together with applicable fees shall be due on October 1 of the current year and stating

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that the reporting entity shall become a nonreporting entity on January 1 of the following year if

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such renewal statement is not filed.

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     5-89-7. Restoration statement.

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     (a) If any reporting entity shall become a nonreporting entity for failure to file a renewal

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statement, it may, at any time during the calendar year following such failure, file a restoration

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statement. The restoration statement shall:

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     (1) Acknowledge that any changes since its most recent filing of a renewal statement or

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restoration statement, or, if no renewal statement or restoration statement has been filed, since the

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filing of its standards statement, to its address within the state or standards and assessment

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measures, and a description of the process by which such changes were identified, developed and

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approved by the entity and the third-party criteria used to develop any changes to the standards

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are available on the website;

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     (2) Acknowledge that a report for all the reporting periods ended more than ninety (90)

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days prior to filing the restoration statement have been made available on the website in

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accordance with this chapter;

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     (3) Provide an Internet link on the website to the report for the most recent reporting

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period and any other reporting period for which an Internet link has not been previously provided

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in a renewal statement or restoration statement; and

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     (4) Be acknowledged by an authorized person.

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     (b) Any nonreporting entity that files a restoration statement shall thereupon

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automatically become a reporting entity, without the need for further action by the secretary of

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state.

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     5-89-8. Limitation of liability.

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     Neither the failure by an entity to satisfy any of its standards, nor the selection of specific

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assessment measures, nor any other action taken by or on behalf of the entity pursuant to this

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chapter or any omission to take any action required by this chapter to seek, obtain or maintain

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status as a reporting entity, shall, in and of itself, create any right of action on the part of any

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person or entity or otherwise give rise to any claim for breach of any fiduciary or similar duty

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owed to any person or entity.

 

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     5-89-9. Fees.

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     No document required to be filed under this chapter shall be effective until the applicable

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fees required by this section are paid and upon the receipt of a statement under § 5-89-5 or a

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renewal statement under § 5-89-6, or a registration statement under § 5-89-7, a fee in the amount

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of up to two hundred dollars ($200) shall be paid to and collected by the secretary of state.

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     5-89-10. Enabling.

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     This act is enabling and applies only to those businesses who seek to become certified as

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a reporting entity and, who comply with all applicable registration requirements. Reporting

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entities are enabled to craft whatever sustainability blueprint they require that meets their specific

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needs as there is no single blueprint for best practices in sustainability among or within industries.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO BUSINESSES AND PROFESSIONS

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     This act would create the Certificate of adoption of transparency and sustainability

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standards act that would enable Rhode Island businesses to voluntarily promulgate standards to

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guide its business activities in a sustainable and responsible manner, as well as metrics for

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assessing whether it has met its objectives.

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     This act would take effect upon passage.

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