[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.
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