Bill Text: NJ A4274 | 2014-2015 | Regular Session | Introduced
Bill Title: The "New Jersey Corporation Political Expenditure Shareholder's Protection Act."
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2015-03-09 - Introduced, Referred to Assembly State and Local Government Committee [A4274 Detail]
Download: New_Jersey-2014-A4274-Introduced.html
Sponsored by:
Assemblyman TROY SINGLETON
District 7 (Burlington)
SYNOPSIS
The "New Jersey Corporation Political Expenditure Shareholder's Protection Act. "
CURRENT VERSION OF TEXT
As introduced.
An Act concerning certain political activities and expenditures by New Jersey corporations, supplementing Title 14A of the New Jersey Statutes and amending N.J.S.14A:3-4.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) This act shall be known and may be cited as the "New Jersey Corporation Political Expenditure Shareholder's Protection Act."
2. (New section) The Legislature finds that:
a. corporations make significant political contributions and expenditures that, directly or indirectly, influence the election of candidates and support or oppose political causes;
b. decisions to use corporate funds for political expenditures are usually made by corporate boards and executives, rather than shareholders;
c. corporations, acting through boards and executives, are obligated to conduct business for the best interests of their owners, the shareholders;
d. historically, shareholders have not had a way to know, or to influence, the political activities of the corporations they own;
e. shareholders and the public have a right to know how corporate managers are spending company funds to make political expenditures benefitting candidates, political parties, and political causes;
f. corporations should be accountable to shareholders in making political expenditures affecting federal and state governance and public policy; and
g. requiring a corporation to obtain the express approval of shareholders prior to making political expenditures will establish necessary accountability.
3. (New section) As used in this act:
"Candidate" shall have the meaning set forth in, as appropriate:
(1) section 3 of P.L.1973, c.83 (C.19:44A-3);
(2) federal election campaign law; or
(3) the law of another state, territory, possession, district or commonwealth.
"Electioneering communication" means any broadcast, cable, or satellite communication which:
(1) refers to a clearly identified candidate;
(2) is made within:
(a) 60 days before a general, special or runoff election for the office sought by the candidate; or
(b) 30 days before a primary or preference election, or a convention or caucus of a political party that has authority to nominate a candidate, for the office sought by the candidate; and
(3) in the case of a communication which refers to a candidate for an office other than President or Vice President of the United States, is targeted to the relevant electorate; or
(4) as appropriate, as otherwise defined by the law of this State, the federal election campaign law, or the law of another state, territory, possession, district or commonwealth.
"Expenditure for political activities" means:
(1) an independent expenditure, as defined in this section;
(2) an electioneering communication, as defined in this section, and any other public communication, as defined in this section, that would be an electioneering communication if it were a broadcast, cable, or satellite communication; or
(3) dues or other payments to trade associations or organizations described in section 501(c) of the Internal Revenue Code of 1986, 26 U.S.C. 501(c), and exempt from tax under section 501(a) of the Internal Revenue Code of 1986, 26 U.S.C. 501(a), that are, or could reasonably be anticipated to be, used or transferred to another association or organization for the purposes described in paragraphs (1) or (2).
"Expenditure for political activities" does not include:
(1) direct lobbying efforts through registered lobbyists or governmental affairs agents employed or retained by the corporation;
(2) communications by a corporation to its shareholders and executive or administrative personnel and their families; or
(3) the establishment and administration of contributions to a separate segregated fund to be utilized for political purposes by a corporation.
"Independent expenditure" means an expenditure by a person:
(1) expressly advocating the election or defeat of a clearly identified candidate; and
(2) that is not made in concert or cooperation with or at the request or suggestion of that candidate, the candidate's authorized political committee, or their agents, or a political party committee or its agents; or
(3) as appropriate, as otherwise defined by the law of this State, the federal election campaign law, or the law of another state, territory, possession , district or commonwealth.
"Public communication" means a communication by means of any broadcast, cable or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to the general public, or any other form of general public political advertising or, as appropriate, as otherwise defined by the law of this State, federal election campaign law, or the law of another state, territory, possession, district or commonwealth.
4. (New section) a. Each solicitation of proxy, consent or authorization by a corporation shall contain:
(1) a description of the specific nature of any expenditure for political activities proposed to be made by the corporation for the forthcoming fiscal year that has not been authorized by a vote of the shareholders of the corporation, to the extent the specific nature is known; and
(2) the total amount of expenditures for political activities proposed to be made by the corporation for the forthcoming fiscal year.
b. No corporation shall make an expenditure for political activities in any fiscal year unless that expenditure:
(1) is specific in nature, to the extent the specific nature is known; and
(2) has been authorized by a separate vote of the majority of the shareholders of the corporation.
5. (New section) a. A violation of section 4 of this act shall be considered a breach of a fiduciary duty of the officers and directors who authorized the expenditure for political activities.
b. An officer or director of a corporation who authorizes an expenditure for political activities in violation of section 4 of this act shall be jointly and severally liable in any action brought in a court of competent jurisdiction to any person or class of persons who held shares at the time the expenditure for political activities was made for an amount equal to three times the amount of the expenditure for political activities.
6. (New section) a. The bylaws of a corporation shall expressly provide for a vote of the board of directors of the corporation on:
(1) any expenditure for political activities in excess of $50,000; and
(2) any expenditure for political activities that would result in the total amount spent by the corporation for a particular election in excess of $50,000.
b. A corporation shall make the votes of each member of the board of directors for a vote required under subsection a. of this section publicly available not later than 48 hours after the vote, including in a clear and conspicuous location on the Internet web site of the corporation.
c. For purposes of this act, an expenditure for political activities by a corporation shall not be treated as made in concert or cooperation with, or at the request or suggestion of, any candidate or committee solely because a member of the board of directors of the corporation voted on the expenditure as required under this section.
7. (New section) A corporation shall include in its annual report to shareholders a summary of:
a. each expenditure for political activities made during the preceding year in excess of $10,000; and
b. each expenditure for political activities for a particular election if the total amount of those expenditures for that election is in excess of $10,000.
8. N.J.S.14A:3-4 is amended to read as follows:
14A:3-4. Contributions by corporations.
(1) Any corporation organized for any purpose under any general or special law of this State, unless otherwise provided in its certificate of incorporation or by-laws, shall have power, irrespective of corporate benefit, to aid, singly or in cooperation with other corporations and with natural persons, in the creation or maintenance of institutions or organizations engaged in community fund, hospital, charitable, philanthropic, educational, scientific or benevolent activities or patriotic or civic activities conducive to the betterment of social and economic conditions, and, subject to the provisions of the "New Jersey Corporation Political Expenditure and Shareholder's Protection Act" P.L. , c. (C. ) (pending before the Legislature as this bill), the board may authorize the making of contributions for those purposes in money, securities, including shares of the corporation, or other property, in such reasonable amounts as the board may determine; provided, that a contribution shall not be authorized hereunder if at the time of the contribution or immediately thereafter the donee institution shall own more than 10% of the voting stock of the donor corporation or one of its subsidiaries.
(2) The provisions of this section shall not be construed as directly or indirectly minimizing or interpreting the rights and powers of corporations, as heretofore existing, with reference to appropriations, expenditures or contributions of the nature above specified.
(cf. P.L.1988, c.94, s.12)
9. This act shall take effect on the 180th day next following enactment.
STATEMENT
Few companies today even disclose their political spending to investors, let alone give them a say in it. As a result, company executives may be spending money shareholders invested in a corporation to support political candidates or causes that are directly adverse to shareholders' interests - without shareholders even knowing about it. This bill, the "New Jersey Corporation Political Expenditure Shareholder's Protection Act," requires a New Jersey based corporation to receive authorization from a majority of its shareholders before managers can spend money from its general treasury on such political activities.
This bill requires shareholders to authorize, on an annual basis, a political activities budget requested by a corporation. The budget must receive a majority of votes representing all outstanding shares. Political activities covered under the bill include spending for electioneering communications, and independent expenditures, as defined in the bill. Dues and payments made to trade associations and other tax-exempt organizations are included if they could be used for such spending. A company's board of directors must vote to authorize each expenditure over $50,000 within the overall budget approved by the shareholders. Finally, individual board member votes and the details of each such approved expenditure must be disclosed online within 48 hours.
