The US Supreme Court’s ruling in Citizens United v. the Federal Election Commission, has sent shockwaves through the US corporate governance community and re-awakes concerns that companies will use shareholder funds to influence US political elections.
Nearly all restraint on corporate political spending has been lifted by the ruling, prompting the Center for Political Accountability to launch a letter campaign aimed at getting S&P 500 companies to disclose all political contributions, including those to trade associations and tax-exempt groups. The letter also advocates for board oversight of corporate political giving.
As James McRitchie points out in his blog corpgov.net: “We either need a law like in the UK so that companies must get permission from their shareowners in advance to make political contributions in excess of some amount or we need a massive number of shareowner resolutions at each company to accomplish the same.”
Political response to the ruling has been rapid with three draft bills now proposed that would give shareholders the right to veto corporate political expenditure.
RepresentativeMichael Capuano introduced H.R. 4537, the Shareholder Protection Act of 2010. The bill would amend the Securities Exchange Act of 1934 to require (1) an authorizing vote of a majority of shareowners before general treasury funds can be spent on political activities; and (2) quarterly notification to all shareowners on corporations’ contributions or expenditures for political activities.
RepresentativeAlan Grayson has introduced two bills which, if passed, would amend the Securities Exchange Act of 1934 to prohibit any national securities exchange from effecting any transaction in a security issued by a corporation unless the corporation’s registration with the exchange includes a certification that the corporation is currently in compliance with the Federal Election Campaign Act of 1971 governing contributions and expenditures by corporations which were in effect with respect to elections held during 2008. H.R. 4487, the “End the Hijacking of Shareholder Fund Act,” introduced January 21, would require the approval of a majority of a public company’s shareowners for the company to spend money to influence public opinion on matters not related to the company’s products or services.