NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A1783
SPONSOR: Colton
 
TITLE OF BILL:
An act to amend the business corporation law, in relation to requiring
shareholders to approve corporate political expenditures
 
PURPOSE OR GENERAL IDEA OF BILL:
To require shareholders to approve of corporate political expenditures
and to create transparency between corporate political activities and
shareholders
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1. The business corporation law is amended by adding a new
section 631.
Section 1. Paragraph (a)of section 631 of the business corporation law
defines political expenditure.
Section 1. Paragraph (b) of sections 631 of the business corporation law
defines the method by which shareholders would approve political expend-
itures by corporations.
 
JUSTIFICATION:
In 2010 The United States Supreme Court opened the gates in allowing
corporations and unions the ability to spend unlimited amounts of money
on campaign ads and other political tools. By doing this, the Supreme
Court gave special interest groups and lobbyists greater power, which
only further undermines the influence of the average American voter.
In writing the majority ruling in the decision of Citizen United,
Supreme Court Justice Anthony M. Kennedy invited the idea of creating a
shareholder solution to the ruling of the court. This piece of legis-
lation would do just that and give power to corporation shareholders to
have a greater influence in how corporations conduct their political
activities. Justice Kennedy stated that while the government cannot
block corporate political spending, corporations shouldn't be able to
block citizen-shareholders' money on political campaigns without their
consent. By enabling shareholders to hold the authority on how corpo-
rations conduct political activities, the issue of the Citizens united
ruling can be fixed to some extent, through "corporate democracy."
This legislation would create a sense of transparency between the
actions of corporate managers and shareholders with regards to political
activities, and give shareholders a greater role in how companies oper-
ate. At the same time, it would limit corporations, whose shares are
owned by entities that cannot take political positions, from making
political expenditures, essentially ensuring that these entities remain
politically objective. Such entities consist of public pension funds,
universities, etc. This legislation is modeled after part 3 of the
"Shareholders United Act", introduced by Maryland State Senator Jamin B.
Raskin.
 
PRIOR LEGISLATIVE HISTORY:
 
FISCAL IMPLICATIONS:
To be determined
 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law.
STATE OF NEW YORK
________________________________________________________________________
1783
2023-2024 Regular Sessions
IN ASSEMBLY
January 20, 2023
___________
Introduced by M. of A. COLTON, COOK -- read once and referred to the
Committee on Election Law
AN ACT to amend the business corporation law, in relation to requiring
shareholders to approve corporate political expenditures
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The business corporation law is amended by adding a new
2 section 631 to read as follows:
3 § 631. Shareholder approval of political expenditures.
4 (a) "Political expenditure" shall mean a contribution, gift, transfer,
5 disbursement, or promise of money or a thing of value to promote or
6 assist in the promotion of the success or defeat of a candidate, poli-
7 tical party, or question in any state or federal election.
8 (b) A corporation may not use any money or other property of the
9 corporation in connection with a political expenditure unless the share-
10 holders of the corporation, by the affirmative vote of a majority of all
11 votes entitled to be cast, have:
12 (1) Authorized in advance the total amount of money or property that
13 may be used for all political expenditures during a specific fiscal year
14 of the corporation; and
15 (2) Directed that the money or property can be used for:
16 A. A specified candidate or candidates;
17 B. Candidates of a specified political party or parties;
18 C. A specified political party or parties;
19 D. A specified political committee or committees;
20 E. A specified entity or entities exempt from taxation under section
21 501(c)(4) or (6) of the internal revenue code; or
22 F. A specified question or questions.
23 (c) Shareholder consideration of political expenditures shall occur at
24 an annual or special meeting of the shareholders.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD05660-01-3
A. 1783 2
1 (d) Within forty-eight hours after making a political expenditure, the
2 corporation shall:
3 (1) Give notice of the political expenditure by electronic trans-
4 mission to each shareholder that has requested notice; and
5 (2) If the corporation maintains a website, post notice of the poli-
6 tical expenditure on the website.
7 (3) When providing notice pursuant to subparagraphs one and two of
8 this paragraph, the notice shall state the amount, recipient, date, and
9 purpose of the political expenditure.
10 (e) The annual report of the corporation shall contain a list of all
11 political expenditures made by the corporation during the reporting
12 period, including the amount, recipient, date, and purpose of each poli-
13 tical expenditure.
14 (f) If a shareholder disagrees with a political expenditure made under
15 this section, he or she may receive from the corporation upon request a
16 pro rata rebate in an amount of the percentage of the political expendi-
17 ture equal to the percentage of ownership the shareholder has in the
18 corporation.
19 (g) If a majority of a corporation's shares are owned by those who
20 cannot take political positions, including but not limited to state and
21 local pension funds, mutual funds, insurance companies, foundations,
22 churches and universities, then the corporation shall not make political
23 expenditures.
24 § 2. This act shall take effect on the ninetieth day after it shall
25 have become a law.