Shareholder Protection Act of 2010 - Amends the Securities Exchange Act of 1934 to prohibit an issuer from making any expenditure for political activities in excess of $10,000 in any fiscal year without first obtaining the written affirmative authorization for such expenditure by a majority of all shareholders.
Deems a violation of this requirement to be a breach of the fiduciary duty of the officers and directors who authorized such expenditure.
Subjects to joint and several liability to any shareholder or class of shareholders for the amount of such expenditure the officers and directors who authorize it without prior shareholder authorization.
Prohibits rules and guidelines established by any national securities exchange or by the Securities and Exchange Commission (SEC) from considering as a routine corporate matter a decision to make a contribution or expenditure for political activities in excess of $10,000.
Exempts from the shareholder prior approval requirement an issuer whose sole business is the publication or broadcasting of news, commentary, literature, music, entertainment, artistic expression, scientific, historical or academic works, or other forms of information.
Directs the SEC to require issuers to disclose quarterly any expenditure for political activities made during the preceding quarter. Requires such report to be filed with the SEC, provided to shareholders, and be made publicly available through the SEC website.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4537 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 4537
To amend the Securities Exchange Act of 1934 to require the express
authorization of a majority of shareholders of a public company for
certain political expenditures by that company, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 27, 2010
Mr. Capuano (for himself, Mr. Larson of Connecticut, Ms. Pingree of
Maine, and Mr. Grayson) introduced the following bill; which was
referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Securities Exchange Act of 1934 to require the express
authorization of a majority of shareholders of a public company for
certain political expenditures by that company, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Shareholder Protection Act of
2010''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) 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 shareholders.
(2) Corporations, acting through their boards and
executives, are obligated to conduct business for the best
interests of their owners, the shareholders. Corporate boards
and executives that use corporation funds to support and oppose
political candidates, parties, and causes in opposition to the
interests of their shareholders are not acting for the best
interests of the corporation.
(3) Historically, shareholders have not had a way to know,
or to influence, 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 candidates, political
parties, and political causes.
(4) Corporations should be accountable to their
shareholders prior to making political contributions or
expenditures affecting local, State or Federal governance and
public policy. Requiring the express approval of a
corporation's shareholders prior to making political
contributions or expenditures will establish necessary
accountability.
SEC. 3. SHAREHOLDER APPROVAL OF CORPORATE POLITICAL ACTIVITY.
The Securities Exchange Act of 1934 is amended by adding after
section 14 the following new section:
``SEC. 14A. SHAREHOLDER APPROVAL OF CERTAIN POLITICAL EXPENDITURES.
``(a) Affirmative Authorization.--No issuer may make any
expenditure for political activities in excess of $10,000 in any fiscal
year without first obtaining the written affirmative authorization for
such expenditure by a majority of all shareholders.
``(b) Nature of Decisions.--A decision to make a contribution or
expenditure for political activities in excess of $10,000 shall not be
considered a routine matter of the corporation under rules and
guidelines established by any national securities exchange or by the
Commission.
``(c) Fiduciary Duty; Liability.--A violation of subsection (a)
shall be considered a breach of a fiduciary duty of the officers and
directors 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.
``(d) Exemption for Certain Media.--The provisions of this section
shall not apply to an issuer whose sole business is the publication or
broadcasting of news, commentary, literature, music, entertainment,
artistic expression, scientific, historical or academic works, or other
forms of information. The Commission shall issue such guidance as it
determines necessary or appropriate regarding the extent of the
exemption provided by this subsection.
``(e) Definitions.--As used in this section the following
definitions apply:
``(1) Affirmative authorization.--The term `affirmative
authorization' means the full, free, and written consent of a
shareholder, obtained without intimidation or fear of reprisal,
and shall not include votes made by a broker or any other
representative.
``(2) Issue advocacy campaign.--The term `issue advocacy
campaign' means any expenditure for any communication to the
general public intended to encourage the public to contact a
State or Federal Government official regarding pending
legislation, public policy or government rule or regulation,
but does not include contributions or expenditures for
registered lobbyists employed by the corporation to lobby State
or Federal Government officials directly.
``(3) Majority of all shareholders.--The term `majority of
all shareholders' means number of shareholders that combined
own more than 50 percent of all outstanding shares.
Shareholders not casting votes shall not count toward such a
majority.
``(4) Expenditure for political activities.--
``(A) The term `expenditure for political
activities' means--
``(i) expenditures in support of, or
opposition to, any Federal, State, or local
candidate;
``(ii) contributions to or expenditures in
support of any political party, committee,
electioneering communication, voter
registration campaign, ballot measure campaign,
or an issue advocacy campaign; and
``(iii) 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
subparagraphs (A) and (B).
``(B) Such term shall not include--
``(i) direct lobbying efforts through
registered lobbyists employed or hired by the
corporation;
``(ii) communications by a corporation to
its stockholders and executive or
administrative personnel and their families;
``(iii) nonpartisan registration and get-
out-the-vote campaigns by a corporation aimed
at its stockholders and executive or
administrative personnel and their families; or
``(iv) the establishment, administration
and solicitation of contributions to a separate
segregated fund to be utilized for political
purposes by a corporation.''.
SEC. 4. REPORTING REQUIREMENTS.
Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m)
is amended by adding at the end the following:
``(m) Reporting Requirements Relating to Certain Political
Expenditures.--
``(1) In general.--Not later than 180 days after the date
of enactment of this subsection, the Commission shall modify
its reporting rules under this section to require issuers to
disclose quarterly any expenditure for political activities (as
such term is defined in section 14A(e)(4)) made during the
preceding quarter. Such a report shall be filed with the
Commission and provided to shareholders and shall include--
``(A) the date of the contributions or
expenditures;
``(B) the amount of the contributions or
expenditures;
``(C) the name or identity of the candidate,
political party, committee, electioneering
communication, voter registration campaign, ballot
measure campaign or issue advocacy campaign;
``(D) 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;
``(E) if the contributions or expenditures were
made for or against a ballot measure, the purpose of
the measure and whether the contributions or
expenditures were made in support or opposition to the
ballot measure; and
``(F) if the contributions or expenditures were
made for or against an issue advocacy campaign, the
nature of the political issue and whether the
contributions were made in support or opposition to the
political issue.
``(2) Public availability.--The Commission shall ensure
that, to the greatest extent practicable, the quarterly reports
required by this subsection are publicly available through the
Commission website in a manner that is searchable, sortable and
downloadable, consistent with the requirements of section
24.''.
SEC. 5. REPORT.
On an annual basis, the Office of Management and Budget shall
conduct an audit on the compliance or noncompliance with the
requirements of this Act by public corporations, their management and
shareholders, as well as the effectiveness of the Securities and
Exchange Commission in meeting the reporting and disclosure
requirements of this Act. Not later than April 1 of each year, the
Office of Management and Budget shall submit to the President a report
on the audit activities required under this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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