Shareholder Protection Act of 2010 - (Sec. 3) Amends the Securities Exchange Act of 1934 to require that any solicitation of a proxy, consent, or authorization with respect to any security of an issuer: (1) describe the specific nature and total amount of expenditures proposed for political activities for the forthcoming fiscal year; and (2) provide for a separate shareholder vote to authorize such proposed expenditures.
Prohibits an issuer from making an expenditure for political activities in any fiscal year unless: (1) such expenditure meets the requirements of this Act; and (2) authorization for such expenditure has been granted by votes representing a majority of outstanding shares.
Deems a violation of such prohibition a breach of the fiduciary duty of the officers and directors who authorized the expenditure. Subjects officers and directors who authorize the expenditure without prior shareholder authorization to joint and several liability to any individual shareholder or class of individuals who held shares at the time of such expenditure for three times the expenditure's amount.
Requires institutional investment managers to disclose annually in mandatory reports how they voted on corporate political expenditures. Requires the Securities and Exchange Commission (SEC) to promulgate regulations requiring: (1) investment managers to report how they voted within 30 days after the vote; and (2) the report to be made available to the public through the EDGAR system.
Prohibits any person from bringing any civil, criminal, or administrative action against an institutional investment manager, or any of its employees, officers, or directors, based solely upon the investment manager's decision to either divest from, or not to invest in, the securities of an issuer based upon political expenditures made by that issuer. Applies this prohibition only to an institutional investment manager, or its employees, officers, or directors, that makes such disclosures in accordance with SEC regulations.
(Sec. 4) Requires the SEC to direct the national securities exchanges and national securities associations to prohibit the listing of any class of equity security of an issuer whose corporate bylaws do not expressly provide for a vote by its board of directors on any individual expenditure: (1) for political activities in excess of $50,000; or (2) that makes the total expenditures by the issuer for a particular election $50,000 or more. Requires an issuer to make the individual votes of the directors regarding any such expenditure publicly available within 48 hours.
(Sec. 5) Directs the SEC to: (1) require issuers to disclose expenditures for political activities made during the preceding quarter, along with specified details, and the individual votes by board members authorizing such expenditures; (2) make such reports publicly available on its SEC website and through the EDGAR system; and (3) require each issuer to include in its annual report to shareholders a summary of all expenditures for political activities made during the preceding year in excess of $10,000.
Directs the SEC to require each issuer to: (1) obtain and disclose in its mandatory reports any materials created with or purchased by any expenditure for political activities; and (2) disclose such materials in a clear and conspicuous location on its Internet website within 48 hours of obtaining the materials.
(Sec. 6) Directs the SEC to assess and report to Congress annually on the compliance of public corporations and their management with the requirements of this Act. Requires the Comptroller General to evaluate and report periodically to Congress on the effectiveness of the SEC's oversight of its reporting and disclosure requirements.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4790 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 4790
To amend the Securities Exchange Act of 1934 to require shareholder
authorization before a public company may make certain political
expenditures, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 9, 2010
Mr. Capuano (for himself, Mr. Ackerman, Mr. Filner, Mr. Grayson, Mr.
Himes, Mr. Holt, Mrs. Maloney, Mr. Pallone, Mr. Peters, and Ms. Roybal-
Allard) introduced the following bill; which was referred to the
Committee on Financial Services, and in addition to the Committee on
House Administration, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Securities Exchange Act of 1934 to require shareholder
authorization before a public company may make certain political
expenditures, 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.
(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 in making political contributions or expenditures
affecting 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. 2. SHAREHOLDER APPROVAL OF CORPORATE POLITICAL ACTIVITY.
The Securities Exchange Act of 1934 is amended by inserting after
section 14 the following new section:
``SEC. 14A. SHAREHOLDER APPROVAL OF CERTAIN POLITICAL EXPENDITURES.
``(a) Shareholder Authorization for Political Expenditures.--Any
solicitation of any proxy or consent or authorization in respect of any
security of an issuer 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.
``(b) Restriction on Expenditures.--No issuer shall make any
expenditure for political activities in any fiscal year unless--
``(1) such expenditure is of the nature of those proposed
by the issuer pursuant to subsection (a)(1); and
``(2) authorization for such expenditures has been granted
by votes representing a majority of outstanding shares pursuant
to subsection (a)(2).
``(c) Fiduciary Duty; Liability.--A violation of subsection (b)
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) Definition of Expenditure for Political Activities.--As used
in this section:
``(1) The term `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 subparagraph (A).
``(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 contributions to a separate segregated
fund to be utilized for political purposes by a
corporation.''.
SEC. 3. DISCLOSURE OF PROXY VOTES BY INSTITUTIONAL INVESTORS.
Section 13(f) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(f)) is amended by redesignating paragraph (5) as paragraph (7) and
inserting after paragraph (4) the following:
``(5) Disclosure of votes.--Each institutional investment
manager subject to this subsection shall include in the reports
required under this subsection, at least annually, a statement
of how it voted on any shareholder vote provided for under
section 14A(a) 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 Commission. Not
later than 6 months after the date of enactment of this
paragraph, the Commission shall issue rules and regulations to
implement this paragraph.
``(6) Safe harbor for certain divestment decisions.--
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 an issuer because of expenditures for political
activities made by that issuer.''.
SEC. 4. REQUIRED BOARD VOTE ON CORPORATE EXPENDITURES FOR POLITICAL
ACTIVITIES.
(a) Required Vote.--The Securities Exchange Act of 1934 is amended
by adding after section 16 the following new section:
``SEC. 16A. REQUIRED BOARD VOTE ON CORPORATE EXPENDITURES FOR POLITICAL
ACTIVITIES.
``(a) Listing on Exchanges.--Effective not later than 180 days
after the date of enactment of this section, the Commission shall, by
rule, direct the national securities exchanges and national securities
associations to prohibit the listing of any class of equity security of
an issuer that is not in compliance with the requirements of any
portion of subsection (b).
``(b) Requirement for Vote in Corporate Bylaws.--The corporate
bylaws of an issuer shall expressly provide for a vote of the directors
of the issuer on any individual expenditure for political activities
(as such term is defined in section 14A(d)(1)) in excess of $50,000. An
issuer shall make publicly available the individual votes of the
directors required by the preceding sentence within 48 hours of the
vote, including in a clear and conspicuous location on the Internet
website of the issuer.''.
(b) No Effect on Determination of Coordination With Candidates or
Campaigns.--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 16A(b) of the Securities
Exchange Act of 1934 (as added by subsection (a)).
SEC. 5. 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(c)(1)) made during the
preceding quarter and the individual votes by board members
authorizing such expenditures. Such a report shall be filed
with the Commission and provided to shareholders and shall
include--
``(A) the date of the expenditures;
``(B) the amount of the expenditures;
``(C) 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
``(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.
``(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.
The Comptroller General of the United States shall annually conduct
a study on the compliance with the requirements of this Act by public
corporations and their management, 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 Comptroller General shall submit to Congress a report of such
study.
SEC. 6. SEVERABILITY.
If any provision of this Act, an amendment made by this Act, or the
application of such provision or amendment to any person or
circumstance 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.
<all>
Introduced in House
Introduced in House
Referred to House Financial Services
Referred to the Committee on Financial Services, and in addition to the Committee on House Administration, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to House Administration
Committee Consideration and Mark-up Session Held.
Ordered to be Reported (Amended) by the Yeas and Nays: 35 - 28.
Reported (Amended) by the Committee on Financial Services. H. Rept. 111-620, Part I.
Reported (Amended) by the Committee on Financial Services. H. Rept. 111-620, Part I.
Committee on House Administration discharged.
Committee on House Administration discharged.
Placed on the Union Calendar, Calendar No. 362.
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