I 

114TH CONGRESS 

1ST SESSION H. R. 446 

To amend the Securities Exchange Act of 1934 to require shareholder authorization before a public company may make certain political expenditures, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 21, 2015 

Mr. CAPUANO (for himself, Mr. LYNCH, Mr. DEFAZIO, Ms. NORTON, Mr. 

ELLISON, Mr. LARSON of Connecticut, Mr. GRIJALVA, Mr. CONNOLLY, 

Mr. CUMMINGS, Ms. TSONGAS, Mrs. DAVIS of California, Mr. CONYERS, 

Mr. COHEN, Mr. TAKANO, Ms. PINGREE, Mr. SARBANES, Mr. WELCH, 

Ms. SLAUGHTER, Ms. MENG, and Mr. HASTINGS) 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 

shareholder authorization before a public company may 

make certain political expenditures, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Shareholder Protection 

5 Act of 2015’’. 


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1 SEC. 2. FINDINGS. 

2 Congress finds that— 

3 (1) corporations make significant political con4 tributions and expenditures that directly or indi5 rectly influence the election of candidates and sup6 port or oppose political causes; 

7 (2) decisions to use corporate funds for political 

8 contributions and expenditures are usually made by 

9 corporate boards and executives, rather than share10 holders; 

11 (3) corporations, acting through boards and ex12 ecutives, are obligated to conduct business for the 

13 best interests of their owners, the shareholders; 

14 (4) historically, shareholders have not had a 

15 way to know, or to influence, the political activities 

16 of corporations they own; 

17 (5) shareholders and the public have a right to 

18 know how corporate managers are spending com19 pany funds to make political contributions and ex20 penditures benefitting candidates, political parties, 

21 and political causes; 

22 (6) corporations should be accountable to share23 holders in making political contributions or expendi24 tures affecting Federal governance and public policy; 

25 and 


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1 (7) requiring a corporation to obtain the ex2 press approval of shareholders prior to making polit3 ical contributions or expenditures will establish nec4 essary accountability. 

5 SEC. 3. SHAREHOLDER APPROVAL OF CORPORATE POLIT6 ICAL ACTIVITY. 

7 The Securities Exchange Act of 1934 (15 U.S.C. 78a 

8 et seq.) is amended by inserting after section 14B (15 

9 U.S.C. 78n–2) the following: 

10 ‘‘SEC. 14C. SHAREHOLDER APPROVAL OF CERTAIN POLIT11 ICAL EXPENDITURES AND DISCLOSURE OF 

12 VOTES OF INSTITUTIONAL INVESTORS. 

13 ‘‘(a) DEFINITIONS.—In this section— 

14 ‘‘(1) the term ‘expenditure for political activi15 ties’— 

16 ‘‘(A) means— 

17 ‘‘(i) an independent expenditure (as 

18 defined in section 301(17) of the Federal 

19 Election Campaign Act of 1971 (52 U.S.C. 

20 30101(17))); 

21 ‘‘(ii) an electioneering communication 

22 (as defined in section 304(f)(3) of that Act 

23 (52 U.S.C. 30104(f)(3))) and any other 

24 public communication (as defined in sec25 tion 301(22) of that Act (52 U.S.C. 


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1 30101(22))) that would be an election2 eering communication if it were a broad3 cast, cable, or satellite communication; or 

4 ‘‘(iii) dues or other payments to trade 

5 associations or organizations described in 

6 section 501(c) of the Internal Revenue 

7 Code of 1986 and exempt from tax under 

8 section 501(a) of that Code that are, or 

9 could reasonably be anticipated to be, used 

10 or transferred to another association or or11 ganization for the purposes described in 

12 clauses (i) or (ii); and 

13 ‘‘(B) does not include— 

14 ‘‘(i) direct lobbying efforts through 

15 registered lobbyists employed or hired by 

16 the issuer; 

17 ‘‘(ii) communications by an issuer to 

18 its shareholders and executive or adminis19 trative personnel and their families; or 

20 ‘‘(iii) the establishment and adminis21 tration of contributions to a separate seg22 regated fund to be utilized for political 

23 purposes by a corporation; and 

24 ‘‘(2) the term ‘issuer’ does not include an in25 vestment company registered under section 8 of the 


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1 Investment Company Act of 1940 (15 U.S.C. 80a– 

2 8). 

3 ‘‘(b) SHAREHOLDER AUTHORIZATION FOR POLIT4 ICAL EXPENDITURES.—Each solicitation of proxy, con5 sent, or authorization by an issuer with a class of equity 

6 securities registered under section 12 of this title shall— 

7 ‘‘(1) contain— 

8 ‘‘(A) a description of the specific nature of 

9 any expenditure for political activities proposed 

10 to be made by the issuer for the forthcoming 

11 fiscal year that has not been authorized by a 

12 vote of the shareholders of the issuer, to the ex13 tent the specific nature is known to the issuer; 

14 and 

15 ‘‘(B) the total amount of expenditures for 

16 political activities proposed to be made by the 

17 issuer for the forthcoming fiscal year; and 

18 ‘‘(2) provide for a separate vote of the share19 holders of the issuer to authorize such expenditures 

20 for political activities in the total amount described 

21 in paragraph (1). 

22 ‘‘(c) VOTE REQUIRED TO MAKE EXPENDITURES.— 

23 No issuer shall make an expenditure for political activities 

24 in any fiscal year unless such expenditure— 


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1 ‘‘(1) is of the nature of those proposed by the 

2 issuer in subsection (b)(1); and 

3 ‘‘(2) has been authorized by a vote of the ma4 jority of the outstanding shares of the issuer in ac5 cordance with subsection (b)(2). 

6 ‘‘(d) FIDUCIARY DUTY; LIABILITY.— 

7 ‘‘(1) FIDUCIARY DUTY.—A violation of sub8 section (c) shall be considered a breach of a fidu9 ciary duty of the officers and directors who author10 ized the expenditure for political activities. 

11 ‘‘(2) LIABILITY.—An officer or director of an 

12 issuer who authorizes an expenditure for political ac13 tivities in violation of subsection (c) shall be jointly 

14 and severally liable in any action brought in a court 

15 of competent jurisdiction to any person or class of 

16 persons who held shares at the time the expenditure 

17 for political activities was made for an amount equal 

18 to 3 times the amount of the expenditure for polit19 ical activities. 

20 ‘‘(e) DISCLOSURE OF VOTES.— 

21 ‘‘(1) DISCLOSURE REQUIRED.—Each institu22 tional investment manager subject to section 13(f) 

23 shall disclose not less frequently than annually how 

24 the institutional investment manager voted on any 

25 shareholder vote under subsection (a), unless the 


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1 vote is otherwise required by rule of the Commission 

2 to be reported publicly. 

3 ‘‘(2) RULES.—Not later than 6 months after 

4 the date of enactment of this section, the Commis5 sion shall issue rules to carry out this subsection 

6 that require that a disclosure required under para7 graph (1)— 

8 ‘‘(A) be made not later than 30 days after 

9 a vote described in paragraph (1); and 

10 ‘‘(B) be made available to the public 

11 through the EDGAR system as soon as prac12 ticable. 

13 ‘‘(f) SAFE HARBOR FOR CERTAIN DIVESTMENT DE14 CISIONS.—Notwithstanding any other provision of Federal 

15 or State law, if an institutional investment manager makes 

16 the disclosures required under subsection (e), no person 

17 may bring any civil, criminal, or administrative action 

18 against the institutional investment manager, or any em19 ployee, officer, or director thereof, based solely upon a de20 cision of the investment manager to divest from, or not 

21 to invest in, securities of an issuer due to an expenditure 

22 for political activities made by the issuer.’’. 


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1 SEC. 4. REQUIRED BOARD VOTE ON CORPORATE EXPENDI2 TURES FOR POLITICAL ACTIVITIES. 

3 The Securities Exchange Act of 1934 (15 U.S.C. 78 

4 et seq.) is amended by adding after section 16 (15 U.S.C. 

5 78p) the following: 

6 ‘‘SEC. 16A. REQUIRED BOARD VOTE ON CORPORATE EX7 PENDITURES FOR POLITICAL ACTIVITIES. 

8 ‘‘(a) DEFINITIONS.—In this section, the terms ‘ex9 penditure for political activities’ and ‘issuer’ have the 

10 meaning given the terms in section 14C. 

11 ‘‘(b) LISTING ON EXCHANGES.—Not later than 180 

12 days after the date of enactment of this section, the Com13 mission shall, by rule, direct the national securities ex14 changes and national securities associations to prohibit the 

15 listing of any class of equity security of an issuer that 

16 is not in compliance with the requirements of any portion 

17 of subsection (c). 

18 ‘‘(c) REQUIREMENT FOR VOTE IN CORPORATE BY19 LAWS.— 

20 ‘‘(1) VOTE REQUIRED.—The bylaws of an 

21 issuer shall expressly provide for a vote of the board 

22 of directors of the issuer on— 

23 ‘‘(A) any expenditure for political activities 

24 in excess of $50,000; and 

25 ‘‘(B) any expenditure for political activities 

26 that would result in the total amount spent by 


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1 the issuer for a particular election (as defined 

2 in section 301(1) of the Federal Election Cam3 paign Act of 1971 (52 U.S.C. 30101(1))) in ex4 cess of $50,000. 

5 ‘‘(2) PUBLIC AVAILABILITY.—An issuer shall 

6 make the votes of each member of the board of di7 rectors for a vote required under paragraph (1) pub8 licly available not later than 48 hours after the vote, 

9 including in a clear and conspicuous location on the 

10 Internet website of the issuer. 

11 ‘‘(d) NO EFFECT ON DETERMINATION OF COORDINA12 TION WITH CANDIDATES OR CAMPAIGNS.—For purposes 

13 of the Federal Election Campaign Act of 1971 (52 U.S.C. 

14 30101 et seq.), an expenditure for political activities by 

15 an issuer shall not be treated as made in concert or co16 operation with, or at the request or suggestion of, any can17 didate or committee solely because a member of the board 

18 of directors of the issuer voted on the expenditure as re19 quired under this section.’’. 

20 SEC. 5. REPORTING REQUIREMENTS. 

21 Section 13 of the Securities Exchange Act of 1934 

22 (15 U.S.C. 78m) is amended by adding at the end the 

23 following: 

24 ‘‘(s) REPORTING REQUIREMENTS RELATING TO CER25 TAIN POLITICAL EXPENDITURES.— 


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1 ‘‘(1) DEFINITIONS.—In this subsection, the 

2 terms ‘expenditure for political activities’ and 

3 ‘issuer’ have the same meaning as in section 14C. 

4 ‘‘(2) QUARTERLY REPORTS.— 

5 ‘‘(A) REPORTS REQUIRED.—Not later than 

6 180 days after the date of enactment of this 

7 subsection, the Commission shall amend the re8 porting rules under this section to require each 

9 issuer with a class of equity securities reg10 istered under section 12 of this title to submit 

11 to the Commission and the shareholders of the 

12 issuer a quarterly report containing— 

13 ‘‘(i) a description of any expenditure 

14 for political activities made during the pre15 ceding quarter; 

16 ‘‘(ii) the date of each expenditure for 

17 political activities; 

18 ‘‘(iii) the amount of each expenditure 

19 for political activities; 

20 ‘‘(iv) the votes of each member of the 

21 board of directors authorizing the expendi22 ture for political activity, as required under 

23 section 16A(c); 

24 ‘‘(v) if the expenditure for political ac25 tivities was made in support of or opposed 


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1 to a candidate, the name of the candidate 

2 and the office sought by, and the political 

3 party affiliation of, the candidate; and 

4 ‘‘(vi) the name or identity of trade as5 sociations or organizations described in 

6 section 501(c) of the Internal Revenue 

7 Code of 1986 and exempt from tax under 

8 section 501(a) of such Code which receive 

9 dues or other payments as described in 

10 section 14C(a)(1)(A)(iii). 

11 ‘‘(B) PUBLIC AVAILABILITY.—The Com12 mission shall ensure that, to the greatest extent 

13 practicable, the quarterly reports required 

14 under this paragraph are publicly available 

15 through the Internet website of the Commission 

16 and through the EDGAR system in a manner 

17 that is searchable, sortable, and downloadable, 

18 consistent with the requirements under section 

19 24. 

20 ‘‘(3) ANNUAL REPORTS.—Not later than 180 

21 days after the date of enactment of this subsection, 

22 the Commission shall, by rule, require each issuer to 

23 include in the annual report of the issuer to share24 holders a summary of each expenditure for political 

25 activities made during the preceding year in excess 


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1 of $10,000, and each expenditure for political activi2 ties for a particular election if the total amount of 

3 such expenditures for that election is in excess of 

4 $10,000.’’. 

5 SEC. 6. REPORTS. 

6 (a) SECURITIES AND EXCHANGE COMMISSION.—The 

7 Securities and Exchange Commission shall— 

8 (1) conduct an annual assessment of the com9 pliance of issuers and officers and members of the 

10 boards of directors of issuers with sections 13(s), 

11 14C, and 16A of the Securities Exchange Act, as 

12 added by this Act; and 

13 (2) submit to Congress an annual report con14 taining the results of the assessment under para15 graph (1). 

16 (b) GOVERNMENT ACCOUNTABILITY OFFICE.—The 

17 Comptroller General of the United States shall periodically 

18 evaluate and report to Congress on the effectiveness of the 

19 oversight by the Securities and Exchange Commission of 

20 the reporting and disclosure requirements under sections 

21 13(s), 14C, and 16A of the Securities Exchange Act, as 

22 added by this Act. 

23 SEC. 7. SEVERABILITY. 

24 If any provision of this Act, an amendment made by 

25 this Act, or the application of such provision or amendVerDate Sep 11 2014 23:35 Jan 26, 2015 Jkt 049200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H446.IH H446

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1 ment to any person or circumstance is held to be unconsti2 tutional, the remainder of this Act, the amendments made 

3 by this Act, and the application of such provision or 

4 amendment to any person or circumstance shall not be af5 fected thereby. 

Æ 


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