Requires the authorization of certain political expenditures by the shareholders and the board of directors of public corporations; requires the comptroller to annually conduct a study on the compliance with the requirements of this act by public corporations and their management.
STATE OF NEW YORK
________________________________________________________________________
43--A
2015-2016 Regular Sessions
IN SENATE(Prefiled)
January 7, 2015
___________
Introduced by Sen. HOYLMAN -- read twice and ordered printed, and when
printed to be committed to the Committee on Corporations, Authorities
and Commissions -- recommitted to the Committee on Corporations,
Authorities and Commissions in accordance with Senate Rule 6, sec. 8
-- committee discharged, bill amended, ordered reprinted as amended
and recommitted to said committee
AN ACT to amend the business corporation law, in relation to requiring
the authorization of certain political expenditures by the sharehold-
ers and the board of directors of public corporations; and to require
the comptroller to annually conduct a study on the compliance with the
requirements of this act by public corporations and their management
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. This act shall be known and may be cited as the "New York
2 shareholder protection act of 2016".
3 § 2. Legislative intent and purpose. The legislature hereby finds
4 that:
5 a. Corporations make significant political contributions and expendi-
6 tures that directly or indirectly influence the election of candidates
7 and support or oppose political causes. Decisions to use corporate funds
8 for political contributions and expenditures are usually made by corpo-
9 rate boards and executives, rather than shareholders.
10 b. Corporations, acting through their boards and executives, are obli-
11 gated to conduct business for the best interests of their owners, the
12 shareholders.
13 c. Historically, shareholders have not had a way to know, or to influ-
14 ence, the political activities of corporations they own. Shareholders
15 and the public have a right to know how corporations are spending their
16 funds to make political contributions or expenditures benefitting candi-
17 dates, political parties, and political causes.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD01376-02-6
S. 43--A 2
1 d. Corporations should be accountable to their shareholders in making
2 political contributions or expenditures affecting Federal governance and
3 public policy. Requiring the express approval of a corporation's share-
4 holders prior to making political contributions or expenditures will
5 establish necessary accountability.
6 § 3. The business corporation law is amended by adding two new
7 sections 609-a and 609-b to read as follows:
8 § 609-a. Shareholder approval of corporate expenditures for political
9 activities.
10 (a) Notwithstanding any provision of law to the contrary, no public-
11 ly-held corporation incorporated in this state and subject to the
12 provisions of this chapter shall make any expenditure for or to fund
13 state, federal or local political activities in any fiscal year unless
14 such expenditure is approved in advance by a quorum of shareholders of
15 all classes and series of shares of the corporation.
16 (b) Any solicitation of any proxy or consent or authorization seeking
17 approval of political expenditures by or on behalf of a corporation
18 shall be subject to all requirements of section 609 (Proxies) and shall:
19 (1) contain a description of the specific nature of any expenditures
20 for political activities proposed to be made by the issuer for the
21 forthcoming fiscal year, to the extent the specific nature is known to
22 the issuer and including the total amount of such proposed expenditures;
23 and
24 (2) provide for a separate shareholder vote to authorize such proposed
25 expenditures in such amount.
26 (c) A violation of the provisions of this section shall be considered
27 a breach of a fiduciary duty of the officers and directors of the corpo-
28 ration who authorized such an expenditure. The officers and directors
29 who authorize such an expenditure without first obtaining such authori-
30 zation of shareholders shall be jointly and severally liable in any
31 action brought in any court of competent jurisdiction to any shareholder
32 or class of shareholders for the amount of such expenditure.
33 (d) As used in this section:
34 (1)(A) "expenditure for political activities" means:
35 (i) an independent expenditure;
36 (ii) contributions to any political party, committee, or electioneer-
37 ing communication; and
38 (iii) dues or other payments to trade associations or other tax exempt
39 organizations.
40 (B) Such term shall not include:
41 (i) direct lobbying efforts through registered lobbyists employed or
42 hired by the issuer;
43 (ii) communications by an issuer to its shareholders and executive or
44 administrative personnel and their families; or
45 (iii) the establishment, administration, and solicitation of contrib-
46 utions to a separate segregated fund to be utilized for political
47 purposes by a corporation.
48 (C) Each institutional investment manager subject to this section
49 shall, at least annually, make public a statement of how it voted on any
50 shareholder vote provided for under this section that occurred since the
51 manager's last such statement, unless such vote is otherwise required to
52 be reported publicly by rule or regulation of the secretary of state,
53 not later than one hundred eighty days after the effective date of this
54 section.
55 (D) Notwithstanding any other provision of federal or state law, no
56 person may bring any civil, criminal, or administrative action against
S. 43--A 3
1 any institutional investment manager, or any employee, officer, or
2 director thereof, based solely upon a decision of the investment manager
3 to divest from, or not to invest in, securities of a corporation subject
4 to the provisions of this section because of expenditures for political
5 activities made by that corporation.
6 (E) The provisions of section 613 (Limitations on right to vote) shall
7 not apply to a vote of the shareholders as provided in this section.
8 (2) "independent expenditure" means a monetary or in-kind expenditure
9 in support of or opposition to any state, federal or local candidate in
10 a covered election or ballot proposal, where no candidate, or an agent
11 or political committee authorized by a candidate has authorized,
12 requested, suggested, fostered or cooperated in any such activity.
13 (3) "electioneering communication" means broadcast, cable, satellite
14 communications, billboards, direct mail, print advertising, radio or
15 newspapers seen by fifty or more people within ninety days of any prima-
16 ry or general election.
17 § 609-b. Board approval of corporate expenditures for political activ-
18 ities.
19 (a) Any individual expenditure for political activities, as defined in
20 section 609-a (Shareholder approval of corporate expenditures for poli-
21 tical activities), in an amount of fifty thousand dollars or more, by a
22 publicly-held corporation shall be approved in advance of the making of
23 the expenditure by a quorum, as defined in section 707 (Quorum of direc-
24 tors), of the board of directors of the corporation. The corporation
25 shall make publicly available the individual votes of the directors
26 required by this paragraph within forty-eight hours of the vote by the
27 board of directors, including posting such results in a clear and
28 conspicuous location on the Internet website of the corporation.
29 (b) For purposes of determining whether an expenditure for political
30 activities by an issuer under the Securities Exchange Act of 1934 is an
31 independent expenditure under the Federal Election Campaign Act of 1971,
32 the expenditure may not be treated as made in concert or cooperation
33 with, or at the request or suggestion of, any candidate or committee
34 solely on the grounds that any director of the issuer voted on the
35 expenditure as required under section 609-a (Shareholder approval of
36 corporate expenditures for political activities).
37 (c) Notwithstanding the provisions of section 601 (By-laws), within
38 one hundred eighty days of the effective date of this section, every
39 corporation subject to the provisions of this chapter shall amend its
40 corporate by-laws to expressly provide for a vote of the shareholders on
41 any expenditure for political activities, as provided in section 609-a
42 (Shareholder approval of corporate expenditures for political activ-
43 ities), and to provide for a vote by the directors of the board of the
44 corporation issuer on any individual expenditure for political activ-
45 ities in excess of five thousand dollars as provided in this section.
46 The by-laws of every new entity incorporated in the state after the
47 effective date of this section shall include such provisions.
48 (d) A violation of the provisions of this section shall be considered
49 a breach of a fiduciary duty of the officers and directors of the corpo-
50 ration who authorized such an expenditure. The officers and directors
51 who authorize such an expenditure without first obtaining such authori-
52 zation of shareholders shall be jointly and severally liable in any
53 action brought in any court of competent jurisdiction to any shareholder
54 or class of shareholders for the amount of such expenditure.
55 § 4. Not later than one hundred eighty days after the effective date
56 of this act, the secretary of state, or his or her designee, shall
S. 43--A 4
1 implement rules and regulations to require corporations to disclose
2 quarterly any expenditure for political activities (as such term is
3 defined in section 609-a of the business corporation law) made during
4 the preceding quarter and the individual votes by board members author-
5 izing such expenditures. Such a report shall be filed with the secretary
6 of state and provided to shareholders and shall include:
7 1. the date of the expenditures;
8 2. the amount of the expenditures;
9 3. the name or identity of the candidate, political party, committee,
10 or electioneering communication, as such term is defined in section
11 304(f)(3)(A) of the Federal Election Campaign Act of 1971 (2 U.S.C.
12 434(f)(3)(A)); and
13 4. if the expenditures were made for or against a candidate, including
14 an electioneering communication, the office sought by the candidate and
15 the political party affiliation of the candidate.
16 The secretary of state, or his or her designee, shall ensure that, to
17 the greatest extent practicable, the reports required by this act are
18 publicly available through the secretary of state website in a manner
19 that is searchable, sortable, and downloadable.
20 § 5. The state comptroller shall annually conduct a study on the
21 compliance with the requirements of this act by public corporations and
22 their management. Not later than April first of each year, the state
23 comptroller shall submit a report of such study to the governor, the
24 temporary president of the senate and the speaker of the assembly.
25 § 6. If any provision of this act, an amendment made by this act, or
26 the application of such provision or amendment to any person or circum-
27 stance is held to be unconstitutional, the remainder of this act, the
28 amendments made by this act, and the application of such provision or
29 amendment to any person or circumstance shall not be affected thereby.
30 § 7. This act shall take effect on the first of January next succeed-
31 ing the date upon which it shall have become a law.
