S0166B0271A00187 VDL:BTW 02/08/17 #90 A00187
AMENDMENTS TO SENATE BILL NO. 166
Sponsor: SENATOR COSTA
Printer's No. 271
Amend Bill, page 1, line 7, by inserting after "Wages"
and Corporate Accountability
Amend Bill, page 1, line 9, by striking out all of said line
and inserting
The General Assembly finds and declares that:
(1) It is the public
Amend Bill, page 1, by inserting between lines 15 and 16
(2) The Commonwealth has a compelling interest in
regulating the affairs of certain business entities and it is
important for the shareholders of corporations to be informed
of the governance of the organizations relating to the
political process.
Amend Bill, page 2, by inserting between lines 2 and 3
"Department." The Department of State of the Commonwealth.
Amend Bill, page 2, by inserting between lines 13 and 14
"General treasury funds." The money in possession of a
corporation incorporated under the laws of this Commonwealth in
the normal course of business, including funds from sales,
accounts payable, loans, investments, bonds or debt instruments.
"Issue advocacy campaign." Political contributions for a
communication to the general public intended to encourage the
public to contact a government official regarding pending
legislation, public policy or a government rule or regulation.
The term shall not include political contributions for
registered lobbyists or other persons employed by the
corporation to lobby directly Federal or State government
officials.
"Known at the time of the authorization vote." At the time
the corporation seeks authorization from shareholders to spend
corporate funds for political activities:
(1) the corporation's officers, directors or employees
have identified a specific political activity for the
corporation to support or oppose;
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(2) corporate officers, directors or employees have
taken steps to obligate funds to a political activity; or
(3) the corporation has a regularly scheduled payment to
a trade association or other entity to pay for a political
activity in the next 12 months.
Amend Bill, page 2, by inserting between lines 17 and 18
"Majority of shareholders." Fifty percent plus one of each
outstanding voting security. A shareholder not casting a vote
shall not count toward affirmative authorization under this act.
"Political activity." A political contribution made directly
or indirectly to, or in support of or opposition to, a
candidate, political party, committee, electioneering
communication, ballot measure campaign or an issue advocacy
campaign. The term shall not include an activity defined as
lobbying under a Federal, State or local law.
Amend Bill, page 3, by inserting between lines 9 and 10
"Separate segregated fund." A political action committee
formed by a corporation for the purpose of making political
contributions to candidates for office or to political parties.
A separate segregated fund which supports a Federal candidate
shall have the same meaning as in section 316 of the Federal
Election Campaign Act of 1971 (Public Law 92-225, 86 Stat. 3).
Amend Bill, page 4, lines 3 through 7, by striking out all of
said lines and inserting
Section 5. Shareholder vote on corporate and unincorporated
association political activities.
(a) Annual vote.--
(1) A corporation organized in this Commonwealth that
spends in the aggregate $10,000 or more of corporate treasury
funds on political activities in this Commonwealth must
comply with the requirements of this section.
(2) A proxy, consent or authorization for an annual
meeting of the shareholders of a corporation organized in
this Commonwealth, or a special meeting in lieu of the
meeting, where proxies are solicited in respect to a security
occurring on or after six months following the date on which
final regulations are published under subsection (d), shall
provide for a separate resolution subject to shareholder vote
to approve spending of $10,000 or more by the corporation for
a political activity.
(3) Notwithstanding the requirement for an annual
shareholder vote to authorize spending of $10,000 or more by
the corporation for a political activity, a corporation may
request authorization for spending on political activities on
a more frequent basis. An authorization request by the
corporation that is not made during an annual authorization
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shall be deemed a special authorization.
(4) If a corporation spends less than an aggregate of
$10,000 in a 12-month period for political activities, the
corporation shall not have to seek shareholder authorization
for the spending.
(b) Shareholder approval.--
(1) If seeking shareholder authorization for
expenditures for political activities, the corporation shall
request the authority to spend a maximum dollar amount in the
next 12 months.
(2) If known at the time of the authorization vote, the
corporation shall articulate whether the corporate treasury
funds so authorized are intended to benefit or defeat
specific candidates, ballot measures or issue advocacy
campaigns or whether it will be paid to specific nonprofits
or trade associations for political activities. The following
apply:
(i) To be effective, the authorization vote must
garner support from a majority of shareholders.
(ii) A vote by the shareholders to approve or
disapprove spending of $10,000 or more by a corporation
for a political activity shall be binding on the
corporation.
(iii) Notwithstanding the requirement for an annual
shareholder vote to authorize spending of $10,000 or more
by the corporation for a political activity, a
corporation may request a special authorization for
additional spending on political activities, provided
that:
(A) all spending on political activities of
$10,000 or more must be authorized by a shareholder
majority vote; and
(B) for any special authorization, the
corporation shall articulate whether the corporate
treasury funds so authorized are intended to benefit
or defeat candidates, ballot measures or issue
advocacy campaigns or will be paid to specific
nonprofits or trade associations for political
activities at the time the special authorization is
requested.
(c) Director liability.--If a corporation makes an
unauthorized political contribution for a political activity,
then the directors at the time that the unauthorized political
contribution was incurred are jointly and severally liable to
repay to the corporation the amount of the unauthorized
expenditure with interest at the rate of 8% per year.
(d) Rulemaking.--The department shall promulgate final
regulations to implement this section no later than six months
after the effective date of this section.
(e) Sole proprietorships excluded.--Notwithstanding any
other provision of this section, nothing in this section shall
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apply a new duty to the owner of a sole proprietorship.
Section 6. Notification to shareholders of corporate political
activities.
(a) Notification to shareholders.--
(1) At least quarterly during each fiscal year, a
corporation organized in this Commonwealth that makes
political contributions for political activities must notify
its shareholders and the department in writing of the nature
of all of its political activities, funded by either its
separate segregated fund or through its general treasury,
including political contributions made directly or
indirectly.
(2) A report made under this section shall include the
following:
(i) The date of the political contributions.
(ii) The amount of the political contributions.
(iii) The identity of the candidate, political
party, committee, electioneering communication, ballot
measure campaign or issue advocacy campaign.
(iv) If the political contributions were made for or
against a candidate, including an electioneering
communication as defined under Federal law, the office
sought by the candidate and the political party
affiliation of the candidate.
(v) If the political contributions were made for or
against a ballot measure, the purpose of the measure and
whether the political contributions were made in support
or opposition to the ballot measure.
(vi) If the political contributions were made for or
against an issue advocacy campaign, the nature of the
political issue and whether the political contributions
were made in support or opposition to the political
issue.
(vii) All political contributions made by a separate
segregated fund affiliated with the corporation.
(b) Public disclosure.--
(1) The quarterly reports of political activities by a
corporation organized in this Commonwealth to shareholders
shall be public records.
(2) A copy of each report filed under subsection (a)(1)
shall be:
(i) submitted to the department; and
(ii) posted for at least one year on the
corporation's publicly accessible Internet website, if
any.
Section 7. Public disclosure of regulated political activities
by the department.
(a) Department duty.--The quarterly reports of political
activities by a corporation organized in this Commonwealth to
shareholders shall be made publicly available by the department.
(b) Electronic form.--A quarterly report required to be
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filed under this section shall be filed in electronic form using
filing software approved or developed by the department in
addition to filing in any other form that the department may
require by regulation and shall be published on the department's
publicly accessible Internet website.
(c) Format.--The department shall ensure that, to the
greatest extent practicable, the quarterly reports on political
activities are publicly available through the department's
publicly accessible Internet website in a format that can be
searched, sorted and downloaded.
Section 8. Report by Department of the Auditor General.
(a) Audit.--On an annual basis, the Department of the
Auditor General shall audit the extent of compliance or
noncompliance with the requirements of this act by corporations
incorporated under the laws of this Commonwealth and their
management and shareholders and the effectiveness of the
department in meeting the reporting and disclosure requirements
of this act.
(b) Report.--No later than April 1 of each year, the
Department of the Auditor General shall submit to the Governor a
report on the audit required under subsection (a) for the
preceding year.
Section 9. Board approval for political expenditures.
(a) Approval required.--Notwithstanding any other provision
of law, a corporation may not make a political contribution
unless specifically authorized to do so:
(1) by the vote of the board of directors of the
corporation at a regular or special meeting;
(2) by the president, vice president, secretary or
treasurer of a corporation whom the board has specifically
empowered to authorize political contributions; or
(3) for a corporation, by any other person designated by
resolution of the board of directors of a corporation to
authorize political contributions.
(b) Form of political contribution.--A corporation may not
make a political contribution as defined under Federal or State
law, other than an in-kind political contribution, except by
check.
Section 10. Applicability to foreign corporations.
(a) General rule.--A foreign corporation, other than a
foreign association or foreign nonprofit corporation, but
including a foreign parent corporation, even if it does not
itself transact intrastate business, is subject to the
requirements of this act if the following apply:
(1) the average of property, payroll and sales factors,
as defined in section 401 of the act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971, with respect to
the foreign corporation, is more than 50% during its latest
full-income year; and
(2) more than one-half of its outstanding voting
securities are held of record by persons having addresses in
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this Commonwealth appearing on the books of the corporation
on the record date for the latest meeting of shareholders
held during its latest full-income year or, if no meeting was
held during that year, on the last day of the latest full-
income year.
(b) Determination.--
(1) The determination of the property, payroll and sales
factors under subsection (a) with respect to any parent
corporation shall be made on a consolidated basis, including
in a unitary computation, after elimination of intercompany
transactions, the property, payroll and sales of the parent
corporation and all of its subsidiaries in which it owns
directly or indirectly more than 50% of the outstanding
shares entitled to vote for the election of directors, but
deducting a percentage of the property, payroll and sales of
each subsidiary equal to the percentage minority ownership,
if any, in the subsidiary.
(2) For the purpose of this section, any securities held
to the knowledge of the issuer in the names of broker-
dealers, nominees for broker-dealers, including clearing
corporations or banks, associations or other entities holding
securities in a nominee name or otherwise on behalf of a
beneficial owner, collectively considered nominee holders,
shall not be considered outstanding.
(3) Notwithstanding paragraph (2), if the foreign
corporation requests all nominee holders to certify, with
respect to all beneficial owners for whom securities are
held, the number of shares held for those beneficial owners
having addresses as shown on the records of the nominee
holder in this Commonwealth and outside of this Commonwealth,
then all shares so certified shall be considered outstanding
and held of record by persons having addresses either in this
Commonwealth or outside of this Commonwealth as so certified,
provided that the certification provided shall be retained
with the record of shareholders and made available for
inspection and copying.
(4) A current list of beneficial owners of a foreign
corporation's securities provided to the corporation by one
or more nominee holders or an agent thereof under the
requirements of 17 CFR ยง 240.14b-1(b)(3) (relating to
obligation of registered brokers and dealers in connection
with the prompt forwarding of certain communications to
beneficial owners) or 240.14b-2(b)(3) (relating to obligation
of banks, associations and other entities that exercise
fiduciary powers in connection with the prompt forwarding of
certain communications to beneficial owners), promulgated
under the Securities Exchange Act of 1934 (48 Stat. 881, 15
U.S.C. 48 Stat. 881) shall constitute an acceptable
certification with respect to beneficial owners for the
purposes of this subsection.
(c) Applicability.--This section shall not apply to a
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corporation:
(1) With outstanding securities listed on the New York
Stock Exchange or the American Stock Exchange.
(2) With outstanding securities designated as qualified
for trading on the Nasdaq National Market of the Nasdaq Stock
Market, or any successor.
(3) If all of its voting shares, other than directors'
qualifying shares, are owned directly or indirectly by a
corporation or corporations not subject to this section.
(d) Liability.--A party who obtains a final determination by
a court of competent jurisdiction that the corporation failed to
provide to the party information required under this act or
provided the party information required under this act that is
incorrect, the court, in its discretion, shall have the power to
include in its judgment recovery by the party from the
corporation of all court costs and reasonable attorney fees
incurred in the legal proceeding to the extent that they relate
to obtaining that final determination.
Section 11.
The dollar figures contained in this act shall be adjusted
biennially at a rate determined by the Federal Election
Commission as authorized under 11 CFR Pt. 110 (relating to
contribution and expenditure limitations and prohibitions). The
Secretary of the Commonwealth shall certify the calculation of
the rate as determined by the Federal Election Commission and
shall publish the new dollar figures in the Pennsylvania
Bulletin.
Section 12. Effective date.
This act shall take effect as follows:
(1) Section 4 shall take effect in 60 days.
(2) Sections 5, 6, 7, 8, 9, 10 and 11 shall take effect
January 1, 2018, or immediately, whichever is later.
(3) This section shall take effect immediately.
(4) The remainder of this act shall take effect
immediately.
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See A00187 in
the context
of SB0166