senate Bill S2952B

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:S2952B

TITLE OF BILL: An act to amend the business corporation law, in
relation to requiring the authorization of certain political
expenditures by the shareholders 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

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
Shareholder Protection Act of 2014.

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 corporation.

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
(Proxies) 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
corporation who authorized such an expenditure. The officers and
directors who authorize such an expenditure without first obtaining,
such authorization 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; contributions to any political
party, committee or electioneering communication; 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
registered 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
shareholder vote provided for under this section that occurred since
the manger'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.

Notwithstanding any other provision of federal or state law, no person
may bring any civil, criminal or administrative action against any
institutional 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.

"Independent expenditure" means a monetary or in-kind contribution is
support of opposition to any state, federal or local candidate in a
covered election or ballot proposal, where no candidate, or an agent
or political committee authorized by a candidate has authorized,
requested suggested, fostered or cooperated in any such activity.

"Electioneering communication" means broadcast, cable, satellite,
communications, billboards, direct mail, print advertising, radio or
newspaper seen by fifty or more people within ninety days of any
primary or general election.

Any individual expenditure for political activities in an amount of
fifty thousand dollars 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 public corporation
shall make publicly available the individual votes of the directors
within forty-eight 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, any candidate or
committee solely on the grounds that any director that any director of
the issuer voted on the expenditure.

Within one hundred and eighty days of the effective date of 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, The, bylaws of every new
entity incorporated in the state after the effective date shall
include these provisions.


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 made during the
preceding quarter and the individual votes by board members
authorizing such expenditures. Such report shall be filed with the
secretary of state and shall include; the date of expenditures, the
amount of expenditures and the name or identity of the candidate,
political party, committee or electioneering communication.

If the expenditures were made for or against a candidate, including an
electioneering communication, the office sought by the candidate and
the political part affiliation of the candidate.

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.

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 first of each year. Severability
clause.

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 shareholders.

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 candidates political parties and political causes.
Corporations should be accountable to their shareholders; requiring
shareholder approval prior to making political contributions or
expenditures will establish necessary 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--B

                       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  --  committee  discharged,  bill  amended,  ordered
  reprinted as amended and recommitted to said committee --  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 commit-
  tee

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 2014".
  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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08075-04-4

S. 2952--B                          2

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-
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 INCORPORATED  IN  THIS  STATE  AND  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 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 609 (PROXIES) 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)(A) "EXPENDITURE FOR POLITICAL ACTIVITIES" MEANS:
  (I) AN INDEPENDENT EXPENDITURE;
  (II)  CONTRIBUTIONS TO ANY POLITICAL PARTY, COMMITTEE, OR ELECTIONEER-
ING COMMUNICATION; AND
  (III) DUES OR OTHER PAYMENTS TO TRADE ASSOCIATIONS OR OTHER TAX EXEMPT
ORGANIZATIONS.
  (B) SUCH TERM SHALL NOT INCLUDE:
  (I) DIRECT LOBBYING EFFORTS THROUGH REGISTERED LOBBYISTS  EMPLOYED  OR
HIRED BY THE ISSUER;
  (II)  COMMUNICATIONS BY AN ISSUER TO ITS SHAREHOLDERS AND EXECUTIVE OR
ADMINISTRATIVE PERSONNEL AND THEIR FAMILIES; OR
  (III) THE ESTABLISHMENT, ADMINISTRATION, AND SOLICITATION OF  CONTRIB-
UTIONS  TO  A  SEPARATE  SEGREGATED  FUND  TO  BE UTILIZED FOR POLITICAL
PURPOSES BY A CORPORATION.
  (C) 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--B                          3

  (D)  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.
  (E) THE PROVISIONS OF SECTION 613 (LIMITATIONS ON RIGHT TO VOTE) SHALL
NOT APPLY TO A VOTE OF THE SHAREHOLDERS AS PROVIDED IN THIS SECTION.
  (2) "INDEPENDENT EXPENDITURE" MEANS A MONETARY OR IN-KIND  EXPENDITURE
IN  SUPPORT OF OR OPPOSITION TO ANY STATE, FEDERAL OR LOCAL CANDIDATE IN
A COVERED ELECTION OR BALLOT PROPOSAL, WHERE NO CANDIDATE, OR  AN  AGENT
OR  POLITICAL  COMMITTEE  AUTHORIZED  BY  A  CANDIDATE  HAS  AUTHORIZED,
REQUESTED, SUGGESTED, FOSTERED OR COOPERATED IN ANY SUCH ACTIVITY.
  (3) "ELECTIONEERING COMMUNICATION" MEANS BROADCAST,  CABLE,  SATELLITE
COMMUNICATIONS,  BILLBOARDS,  DIRECT  MAIL,  PRINT ADVERTISING, RADIO OR
NEWSPAPERS SEEN BY FIFTY OR MORE PEOPLE WITHIN NINETY DAYS OF ANY PRIMA-
RY OR GENERAL ELECTION.
S 609-B. BOARD APPROVAL OF CORPORATE EXPENDITURES FOR  POLITICAL  ACTIV-
           ITIES.
  (A) ANY INDIVIDUAL EXPENDITURE FOR POLITICAL ACTIVITIES, AS DEFINED IN
SECTION  609-A  (SHAREHOLDER APPROVAL OF CORPORATE EXPENDITURE FOR POLI-
TICAL ACTIVITIES), IN AN AMOUNT OF FIFTY THOUSAND 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 707 (QUORUM OF DIREC-
TORS), 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  POSTING  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 609-A (SHAREHOLDER APPROVAL OF
CORPORATE EXPENDITURES FOR POLITICAL ACTIVITIES).
  (C) NOTWITHSTANDING THE PROVISIONS OF SECTION  601  (BY-LAWS),  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 609-A
(SHAREHOLDER APPROVAL OF CORPORATE  EXPENDITURES  FOR  POLITICAL  ACTIV-
ITIES),  AND  TO PROVIDE FOR A VOTE BY THE DIRECTORS OF THE BOARD OF THE
CORPORATION ISSUER ON ANY INDIVIDUAL EXPENDITURE  FOR  POLITICAL  ACTIV-
ITIES  IN  EXCESS  OF FIVE THOUSAND DOLLARS AS PROVIDED IN THIS SECTION.
THE BY-LAWS OF EVERY NEW ENTITY INCORPORATED  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. 2952--B                          4

  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:
  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 first of  each  year,  the  state
comptroller  shall  submit  a  report of such study to the governor, the
temporary 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 it shall have become a law.

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