senate Bill S2952

Amended

Requires the authorization of certain political expenditures by the shareholders and the board of directors of public corporations

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 25 / Jan / 2013
    • REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
  • 11 / Apr / 2013
    • AMEND AND RECOMMIT TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
  • 11 / Apr / 2013
    • PRINT NUMBER 2952A
  • 08 / Jan / 2014
    • REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
  • 07 / Apr / 2014
    • AMEND AND RECOMMIT TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
  • 07 / Apr / 2014
    • PRINT NUMBER 2952B

Summary

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.

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Bill Details

Versions:
S2952
S2952A
S2952B
Legislative Cycle:
2013-2014
Current Committee:
Senate Corporations, Authorities And Commissions
Law Section:
Business Corporation Law
Laws Affected:
Add ยงยง609-a & 609-b, BC L

Sponsor Memo

BILL NUMBER:S2952

TITLE OF BILL: An act to amend the business corporation law, in
relation to requiring the authorization of certain political expendi-
tures by the shareholders and the board of directors of public corpo-
rations; 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

PURPOSE: Requires the authorization of certain political expenditures
by the shareholders and the board of directors of public corporations.

SUMMARY OF PROVISIONS:

Section One - Designates the act to be known as the "New York Sharehold-
er Protection Act of 2013.

Section Two - Outlines legislative intent and purpose.

Section Three - Amends the business corporation law by adding two new
sections 609-a and 609-b.

* Notwithstanding any provision of law to the contrary, no publicly-held
corporation, subject to the provisions of this chapter, shall make any
expenditure for or to fund state, federal or local political activities
in any fiscal year unless such expenditure is approved in advance by a
quorum of shareholders of all classes and series of shares of the corpo-
ration.

* Any solicitation of any proxy or consent or authorization seeking
approval of political expenditures by or on behalf of a corporation
shall be subject to all requirements of section six hundred nine of this
article and shall contain a description of the specific nature of any
expenditures for political activities proposed to be made by the issuer
for the forthcoming fiscal year, to the extent the specific nature is
known to the issuer and including the total amount of such proposed
expenditures and; provide for a separate shareholder vote to authorize
such proposed expenditures in such amount.

* A violation of the provisions of this section shall be considered a
breach of fiduciary duty of the officers and directors of the corpo-
ration who authorized such an expenditure. The officers and directors
who authorize such an expenditure without first obtaining, such authori-
zation of shareholders shall be jointly and severally liable in any
action brought in any court of competent jurisdiction to any shareholder
or class of shareholders for the amount of such expenditure.

* For purposes of this section, "expenditure for political activities
means: an independent expenditure as defined in section 301 (17) of the
Federal Election Campaign Act of 1971; contributions to any political
party, committee or electioneering communication, as defined in the

Federal Election Campaign Act of 1971; dues or other payments to trade
associations or other tax exempt organizations that are, or could
reasonably could be anticipated to be, used for the purpose described in
the first clause of this subparagraph.

* Such terms shall not include; direct lobbying efforts through regis-
tered lobbyists employed or hired by the issuer; communications by an
issuer to its shareholders and executive or administrative personnel and
their families; or the establishment, administration and solicitation of
contributions to a separate segregated fund to be utilized for political
purposes by a corporation.

* Each institutional investment manager subject to this section shall,
at least annually, make a public statement of how it voted on any share-
holder vote that occurred since the manager's last such statement,
unless such vote is otherwise required to be reported publicly by rule
or regulation of the secretary of state, not later than 180 days after
the effective date of this section.

* Notwithstanding any other provision of federal or state law, no person
many bring any civil, criminal, or administrative action against any
institutional investment manager, or any employee, officer, or director
thereof, based solely upon a decision of the investment manage to divest
from, or not invest in, securities of a corporation subject to the
provisions of this section because of expenditures for political activ-
ities made by that corporation.

* Any individual expenditure for political activities in an amount of
$50,000 or more, by a publicly-held corporation shall be approved in
advance of the making of the expenditure by a quorum of the board of
directors of the corporation. The corporation shall make publicly avail-
able individual votes of the directors required by this paragraph with
48 hours of the vote by the board of directors, including posting such
results in a clear and conspicuous location on the Internet website of
the corporation.

* For the purposes of determining whether an expenditure for political
activities by an issuer under the Securities Exchange Act of 1934 is an
independent expenditure under the Federal Election Campaign Act of 1971
the expenditure may not be treated as made in concert or cooperation
with, or at the request or suggestion of, any candidate or committee
solely on the grounds that any director of the issuer voted on the
expenditure as required under section six hundred nine-a of this arti-
cle.

* Within 180 days of the effective date of this section, every cooper-
ation subject to the provisions of this chapter shall amend its corpo-
rate by-laws to expressly provide for a vote of the shareholders on any
expenditure for political activities, and to provide for a vote by the
directors of the board of the corporation on any individual expenditure
for political activities in excess of $50,000. The by-laws of every new

entity incorporated in the state after the effective date of this
section shall include these provisions.

* A violation of these provisions shall be considered a breach of a
fiduciary duty of the officers and directors of the corporation who
authorized such an expenditure. The officers and directors who authorize
such an expenditure without first obtaining such authorization of share-
holders shall be jointly and severally liable in any action brought in
any court of competent jurisdiction to any shareholder or class of
shareholders for the amount of such expenditure.

EXISTING LAW: New Law.

JUSTIFICATION: Corporations make significant political contributions
and expenditures that directly or indirectly influence the election of
candidates and support or oppose political causes. Decisions to use
corporate funds for political contributions and expenditures are usually
made by corporate boards and executives rather than the shareholders.

Corporations, acting through their boards and executives, are obligated
to conduct business for the best interest of their owners, the share-
holders.

Historically, shareholders have not had a way to know, or to influence,
the political activities of the corporations they own. Shareholders and
the public have a right to know how corporations are spending their
funds to make political contributions or expenditures benefitting candi-
dates. political parties and political causes. Corporations should be
accountable to their shareholders; requiring shareholder approval prior
to making political contributions or expenditures will establish neces-
sary accountability.

LEGISLATIVE HISTORY: New Bill.

FISCAL IMPLICATIONS: To be determined.

LOCAL FISCAL IMPLICATIONS: Minimal.

EFFECTIVE DATE: This act shall take effect on the first January next
succeeding the date upon which this act shall have become law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2952

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 25, 2013
                               ___________

Introduced  by  Sen. HOYLMAN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Corporations,  Authorities
  and Commissions

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:

  Section  1.  This act shall be known and may be cited as the "New York
shareholder protection act of 2013".
  S 2. Legislative intent and  purpose.  The  legislature  hereby  finds
that:
  a.  Corporations make significant political contributions and expendi-
tures that directly or indirectly influence the election  of  candidates
and support or oppose political causes. Decisions to use corporate funds
for  political contributions and expenditures are usually made by corpo-
rate boards and executives, rather than shareholders.
  b. Corporations, acting through their boards and executives, are obli-
gated to conduct business for the best interests of  their  owners,  the
shareholders.
  c. Historically, shareholders have not had a way to know, or to influ-
ence,  the  political  activities of corporations they own. Shareholders
and the public have a right to know how corporations are spending  their
funds to make political contributions or expenditures benefitting candi-
dates, political parties, and political causes.
  d.  Corporations should be accountable to their shareholders in making
political contributions or expenditures affecting Federal governance and
public policy.  Requiring the express approval of a corporation's share-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08075-01-3

S. 2952                             2

holders prior to making political  contributions  or  expenditures  will
establish necessary accountability.
  S  3.  The  business  corporation  law  is  amended  by adding two new
sections 609-a and 609-b to read as follows:
S 609-A. SHAREHOLDER APPROVAL OF CORPORATE  EXPENDITURES  FOR  POLITICAL
           ACTIVITIES.
  (A)  NOTWITHSTANDING  ANY PROVISION OF LAW TO THE CONTRARY, NO PUBLIC-
LY-HELD CORPORATION SUBJECT TO THE PROVISIONS OF THIS CHAPTER SHALL MAKE
ANY EXPENDITURE FOR OR TO FUND STATE, FEDERAL OR LOCAL POLITICAL  ACTIV-
ITIES  IN ANY FISCAL YEAR UNLESS SUCH EXPENDITURE IS APPROVED IN ADVANCE
BY A QUORUM OF SHAREHOLDERS OF ALL CLASSES AND SERIES OF SHARES  OF  THE
CORPORATION.
  (B)  ANY SOLICITATION OF ANY PROXY OR CONSENT OR AUTHORIZATION SEEKING
APPROVAL OF POLITICAL EXPENDITURES BY OR  ON  BEHALF  OF  A  CORPORATION
SHALL BE SUBJECT TO ALL REQUIREMENTS OF SECTION SIX HUNDRED NINE OF THIS
ARTICLE AND SHALL:
  (1)  CONTAIN  A DESCRIPTION OF THE SPECIFIC NATURE OF ANY EXPENDITURES
FOR POLITICAL ACTIVITIES PROPOSED TO BE  MADE  BY  THE  ISSUER  FOR  THE
FORTHCOMING  FISCAL  YEAR, TO THE EXTENT THE SPECIFIC NATURE IS KNOWN TO
THE ISSUER AND INCLUDING THE TOTAL AMOUNT OF SUCH PROPOSED EXPENDITURES;
AND
  (2) PROVIDE FOR A SEPARATE SHAREHOLDER VOTE TO AUTHORIZE SUCH PROPOSED
EXPENDITURES IN SUCH AMOUNT.
  (C) A VIOLATION OF THE PROVISIONS OF THIS SECTION SHALL BE  CONSIDERED
A BREACH OF A FIDUCIARY DUTY OF THE OFFICERS AND DIRECTORS OF THE CORPO-
RATION  WHO  AUTHORIZED  SUCH AN EXPENDITURE. THE OFFICERS AND DIRECTORS
WHO AUTHORIZE SUCH AN EXPENDITURE WITHOUT FIRST OBTAINING SUCH  AUTHORI-
ZATION  OF  SHAREHOLDERS  SHALL  BE  JOINTLY AND SEVERALLY LIABLE IN ANY
ACTION BROUGHT IN ANY COURT OF COMPETENT JURISDICTION TO ANY SHAREHOLDER
OR CLASS OF SHAREHOLDERS FOR THE AMOUNT OF SUCH EXPENDITURE.
  (D) AS USED IN THIS SECTION:
  (1) "EXPENDITURE FOR POLITICAL ACTIVITIES" MEANS:
  (A) AN INDEPENDENT EXPENDITURE, AS SUCH TERM  IS  DEFINED  IN  SECTION
301(17) OF THE FEDERAL ELECTION CAMPAIGN ACT OF 1971 (2 U.S.C. 431(17));
  (B) CONTRIBUTIONS TO ANY POLITICAL PARTY, COMMITTEE, OR ELECTIONEERING
COMMUNICATION,  AS  SUCH  TERM IS DEFINED IN SECTION 304(F)(3)(A) OF THE
FEDERAL ELECTION CAMPAIGN ACT OF 1971 (2 U.S.C. 434(F)(3)(A)); AND
  (C) DUES OR OTHER PAYMENTS TO TRADE ASSOCIATIONS OR OTHER  TAX  EXEMPT
ORGANIZATIONS  THAT  ARE, OR COULD REASONABLY BE ANTICIPATED TO BE, USED
FOR THE PURPOSES DESCRIBED IN CLAUSE (A) OF THIS SUBPARAGRAPH.
  (2) SUCH TERM SHALL NOT INCLUDE:
  (A) DIRECT LOBBYING EFFORTS THROUGH REGISTERED LOBBYISTS  EMPLOYED  OR
HIRED BY THE ISSUER;
  (B)  COMMUNICATIONS  BY AN ISSUER TO ITS SHAREHOLDERS AND EXECUTIVE OR
ADMINISTRATIVE PERSONNEL AND THEIR FAMILIES; OR
  (C) THE ESTABLISHMENT, ADMINISTRATION, AND  SOLICITATION  OF  CONTRIB-
UTIONS  TO  A  SEPARATE  SEGREGATED  FUND  TO  BE UTILIZED FOR POLITICAL
PURPOSES BY A CORPORATION.
  (E) EACH INSTITUTIONAL INVESTMENT  MANAGER  SUBJECT  TO  THIS  SECTION
SHALL, AT LEAST ANNUALLY, MAKE PUBLIC A STATEMENT OF HOW IT VOTED ON ANY
SHAREHOLDER VOTE PROVIDED FOR UNDER THIS SECTION THAT OCCURRED SINCE THE
MANAGER'S LAST SUCH STATEMENT, UNLESS SUCH VOTE IS OTHERWISE REQUIRED TO
BE  REPORTED  PUBLICLY  BY RULE OR REGULATION OF THE SECRETARY OF STATE,
NOT LATER THAN ONE HUNDRED EIGHTY DAYS AFTER THE EFFECTIVE DATE OF  THIS
SECTION.

S. 2952                             3

  (F)  NOTWITHSTANDING  ANY  OTHER PROVISION OF FEDERAL OR STATE LAW, NO
PERSON MAY BRING ANY CIVIL, CRIMINAL, OR ADMINISTRATIVE  ACTION  AGAINST
ANY  INSTITUTIONAL  INVESTMENT  MANAGER,  OR  ANY  EMPLOYEE, OFFICER, OR
DIRECTOR THEREOF, BASED SOLELY UPON A DECISION OF THE INVESTMENT MANAGER
TO DIVEST FROM, OR NOT TO INVEST IN, SECURITIES OF A CORPORATION SUBJECT
TO  THE PROVISIONS OF THIS SECTION BECAUSE OF EXPENDITURES FOR POLITICAL
ACTIVITIES MADE BY THAT CORPORATION.
  (G) THE PROVISIONS OF SECTION SIX HUNDRED  THIRTEEN  OF  THIS  ARTICLE
SHALL  NOT  APPLY  TO  A  VOTE  OF  THE SHAREHOLDERS AS PROVIDED IN THIS
SECTION.
S 609-B. BOARD APPROVAL OF CORPORATE EXPENDITURES FOR  POLITICAL  ACTIV-
           ITIES.
  (A) ANY INDIVIDUAL EXPENDITURE FOR POLITICAL ACTIVITIES, AS DEFINED IN
SECTION  SIX HUNDRED NINE-A OF THIS ARTICLE, IN AN AMOUNT OF FIFTY THOU-
SAND DOLLARS OR MORE, BY A PUBLICLY-HELD CORPORATION SHALL  BE  APPROVED
IN  ADVANCE  OF THE MAKING OF THE EXPENDITURE BY A QUORUM, AS DEFINED IN
SECTION SEVEN HUNDRED SEVEN OF THIS CHAPTER, OF THE BOARD  OF  DIRECTORS
OF  THE CORPORATION.   THE CORPORATION SHALL MAKE PUBLICLY AVAILABLE THE
INDIVIDUAL VOTES OF THE DIRECTORS  REQUIRED  BY  THIS  PARAGRAPH  WITHIN
FORTY-EIGHT HOURS OF THE VOTE BY THE BOARD OF DIRECTORS, INCLUDING POST-
ING  SUCH  RESULTS  IN  A CLEAR AND CONSPICUOUS LOCATION ON THE INTERNET
WEBSITE OF THE CORPORATION.
  (B) FOR PURPOSES OF DETERMINING WHETHER AN EXPENDITURE  FOR  POLITICAL
ACTIVITIES  BY AN ISSUER UNDER THE SECURITIES EXCHANGE ACT OF 1934 IS AN
INDEPENDENT EXPENDITURE UNDER THE FEDERAL ELECTION CAMPAIGN ACT OF 1971,
THE EXPENDITURE MAY NOT BE TREATED AS MADE  IN  CONCERT  OR  COOPERATION
WITH,  OR  AT  THE  REQUEST OR SUGGESTION OF, ANY CANDIDATE OR COMMITTEE
SOLELY ON THE GROUNDS THAT ANY DIRECTOR  OF  THE  ISSUER  VOTED  ON  THE
EXPENDITURE  AS  REQUIRED UNDER SECTION SIX HUNDRED NINE-A OF THIS ARTI-
CLE.
  (C) NOTWITHSTANDING THE PROVISIONS OF SECTION SIX HUNDRED ONE OF  THIS
ARTICLE,  WITHIN  ONE  HUNDRED EIGHTY DAYS OF THE EFFECTIVE DATE OF THIS
SECTION, EVERY CORPORATION SUBJECT TO THE  PROVISIONS  OF  THIS  CHAPTER
SHALL AMEND ITS CORPORATE BY-LAWS TO EXPRESSLY PROVIDE FOR A VOTE OF THE
SHAREHOLDERS ON ANY EXPENDITURE FOR POLITICAL ACTIVITIES, AS PROVIDED IN
SECTION SIX HUNDRED NINE-A OF THIS ARTICLE, AND TO PROVIDE FOR A VOTE BY
THE  DIRECTORS  OF THE BOARD OF THE CORPORATION ISSUER ON ANY INDIVIDUAL
EXPENDITURE FOR POLITICAL ACTIVITIES IN EXCESS OF FIFTY THOUSAND DOLLARS
AS PROVIDED IN THIS SECTION. THE BY-LAWS OF EVERY  NEW  ENTITY  INCORPO-
RATED  IN  THE  STATE  AFTER  THE  EFFECTIVE  DATE OF THIS SECTION SHALL
INCLUDE SUCH PROVISIONS.
  (D) A VIOLATION OF THE PROVISIONS OF THIS SECTION SHALL BE  CONSIDERED
A BREACH OF A FIDUCIARY DUTY OF THE OFFICERS AND DIRECTORS OF THE CORPO-
RATION  WHO  AUTHORIZED  SUCH AN EXPENDITURE. THE OFFICERS AND DIRECTORS
WHO AUTHORIZE SUCH AN EXPENDITURE WITHOUT FIRST OBTAINING SUCH  AUTHORI-
ZATION  OF  SHAREHOLDERS  SHALL  BE  JOINTLY AND SEVERALLY LIABLE IN ANY
ACTION BROUGHT IN ANY COURT OF COMPETENT JURISDICTION TO ANY SHAREHOLDER
OR CLASS OF SHAREHOLDERS FOR THE AMOUNT OF SUCH EXPENDITURE.
  S 4. Not later than one hundred eighty days after the  effective  date
of  this  act,  the  secretary  of  state, or his or her designee, shall
implement rules and regulations  to  require  corporations  to  disclose
quarterly  any  expenditure  for  political  activities (as such term is
defined in section 609-a of the business corporation  law)  made  during
the  preceding quarter and the individual votes by board members author-
izing such expenditures. Such a report shall be filed with the secretary
of state and provided to shareholders and shall include:

S. 2952                             4

  1. the date of the expenditures;
  2. the amount of the expenditures;
  3.  the name or identity of the candidate, political party, committee,
or electioneering communication, as such  term  is  defined  in  section
304(f)(3)(A)  of  the  Federal  Election  Campaign Act of 1971 (2 U.S.C.
434(f)(3)(A)); and
  4. if the expenditures were made for or against a candidate, including
an electioneering communication, the office sought by the candidate  and
the political party affiliation of the candidate.
  The  secretary of state, or his or her designee, shall ensure that, to
the greatest extent practicable, the reports required by  this  act  are
publicly  available  through  the secretary of state website in a manner
that is searchable, sortable, and downloadable.
  S 5. The state comptroller shall  annually  conduct  a  study  on  the
compliance  with the requirements of this act by public corporations and
their management. Not later than April 1 of each year, the  state  comp-
troller  shall submit a report of such study to the governor, the tempo-
rary president of the senate and the speaker of the assembly.
  S 6. If any provision of this act, an amendment made by this  act,  or
the  application of such provision or amendment to any person or circum-
stance is held to be unconstitutional, the remainder of  this  act,  the
amendments  made  by  this act, and the application of such provision or
amendment to any person or circumstance shall not be affected thereby.
  S 7. This act shall take effect on the first of January next  succeed-
ing the date upon which this act shall have become a law.

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