Requires the authorization of certain political expenditures by the shareholders and the board of directors of public corporations

Summary of provisions

Section One - Designates the act to be known as the "New York Shareholder Protection Act of 2014.

Section Two - Outlines legislative intent and purpose.

Section Three - Amends the business corporation law by adding two new sections 609-a and 609-b.

Notwithstanding any provision of law to the contrary, no publicly-held corporation, subject to the provisions of this chapter, shall make any expenditure for or to fund state, federal or local political activities in any fiscal year unless such expenditure is approved in advance by a quorum of shareholders of all classes and series of shares of the corporation.

Any solicitation of any proxy or consent or authorization seeking approval of political expenditures by or on behalf of a corporation shall be subject to all requirements of section six hundred nine (Proxies) of this article and shall 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; provide for a separate shareholder vote to authorize such proposed expenditures in such amount.

A violation of the provisions of this section shall be considered a breach of fiduciary duty of the officers and directors of the corporation 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.

For purposes of this section, "expenditure for political activities means: an independent expenditure; contributions to any political party, committee or electioneering communication; dues or other payments to trade associations or other tax exempt organizations that are, or could reasonably could be anticipated to be, used for the purpose described in the first clause of this subparagraph.

Such terms shall not include; direct lobbying efforts through registered lobbyists employed or hired by the issuer; communications by an issuer to its shareholders and executive or administrative personnel and their families; or the establishment, administration and solicitation of contributions to a separate segregated fund to be utilized for political purposes by a corporation.

Each institutional investment manager subject to this section shall, at least annually, make a public statement of how it voted on any shareholder vote provided for under this section that occurred since the manger's last such statement, unless such vote is otherwise required to be reported publicly by rule or regulation of the secretary of state, not later than one hundred eighty days after the effective date of this section.

Notwithstanding any other provision of federal or state law, no person may bring any civil, criminal or administrative action against any institutional investment manager to divest from, or not to invest in securities of a corporation subject to the provisions of this section because of expenditures for political activities made by that corporation.

"Independent expenditure" means a monetary or in-kind contribution is support of opposition to any state, federal or local candidate in a covered election or ballot proposal, where no candidate, or an agent or political committee authorized by a candidate has authorized, requested suggested, fostered or cooperated in any such activity.

"Electioneering communication" means broadcast, cable, satellite, communications, billboards, direct mail, print advertising, radio or newspaper seen by fifty or more people within ninety days of any primary or general election.

Any individual expenditure for political activities in an amount of fifty thousand dollars or more, by a publicly-held corporation shall be approved in advance of the making of the expenditure by a quorum, of the board of directors of the corporation. The public corporation shall make publicly available the individual votes of the directors within forty-eight hours of the vote by the board of directors, including posting such results in a clear and conspicuous location on the Internet website of the corporation.

For the 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, any candidate or committee solely on the grounds that any director that any director of the issuer voted on the expenditure.

Within one hundred and eighty days of the effective date of every corporation subject to the provisions of this chapter shall amend its corporate by-laws to expressly provide for a vote of the shareholders on any expenditure for political activities, The, bylaws of every new entity incorporated in the state after the effective date shall include these provisions.

Not later than one hundred eighty days after the effective date of this act, the secretary of state, or his or her designee, shall implement rules and regulations to require corporations to disclose quarterly any expenditure for political activities made during the preceding quarter and the individual votes by board members authorizing such expenditures. Such report shall be filed with the secretary of state and shall include; the date of expenditures, the amount of expenditures and the name or identity of the candidate, political party, committee or electioneering communication.

If the expenditures were made for or against a candidate, including an electioneering communication, the office sought by the candidate and the political part affiliation of the candidate.

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.

The secretary of state, or his or her designee, shall ensure that, to the greatest extent practicable, the reports required by this act are publicly available through the secretary of state website in a manner that is searchable, sortable and downloadable.

The state comptroller shall annually conduct a study on the compliance with the requirements of this act by public corporations and their management. Not later than April first of each year. Severability clause.

Existing law

New Law.

Justification

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 the shareholders.

Corporations, acting through their boards and executives, are obligated to conduct business for the best interest of their owners, the shareholders.

Historically, shareholders have not had a way to know, or to influence, the political activities of the 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. Corporations should be accountable to their shareholders; requiring shareholder approval prior to making political contributions or expenditures will establish necessary accountability.

Legislative history

New Bill.

Fiscal implications

To be determined.

Local fiscal implications

Minimal.

Effective date

This act shall take effect on the first January next succeeding the date upon which this act shall have become law.