I 

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. 

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 2010’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


hsrobinson on DSK69SOYB1PROD with BILLS
2 

•HR 4537 IH

1 (1) Corporations make significant political con2 tributions and expenditures that directly or indi3 rectly influence the election of candidates and sup4 port or oppose political causes. Decisions to use cor5 porate funds for political contributions and expendi6 tures are usually made by corporate boards and ex7 ecutives, rather than shareholders. 

8 (2) Corporations, acting through their boards 

9 and executives, are obligated to conduct business for 

10 the best interests of their owners, the shareholders. 

11 Corporate boards and executives that use corpora12 tion funds to support and oppose political can13 didates, parties, and causes in opposition to the in14 terests of their shareholders are not acting for the 

15 best interests of the corporation. 

16 (3) Historically, shareholders have not had a 

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

18 of corporations they own. Shareholders and the pub19 lic have a right to know how corporations are spend20 ing their funds to make political contributions or ex21 penditures benefitting candidates, political parties, 

22 and political causes. 

23 (4) Corporations should be accountable to their 

24 shareholders prior to making political contributions 

25 or expenditures affecting local, State or Federal govVerDate Nov 24 2008 21:48 Jan 28, 2010 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4537.IH H4537

hsrobinson on DSK69SOYB1PROD with BILLS
3 

•HR 4537 IH

1 ernance and public policy. Requiring the express ap2 proval of a corporation’s shareholders prior to mak3 ing political contributions or expenditures will estab4 lish necessary accountability. 

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

7 The Securities Exchange Act of 1934 is amended by 

8 adding after section 14 the following new section: 

9 ‘‘SEC. 14A. SHAREHOLDER APPROVAL OF CERTAIN POLIT10 ICAL EXPENDITURES. 

11 ‘‘(a) AFFIRMATIVE AUTHORIZATION.—No issuer may 

12 make any expenditure for political activities in excess of 

13 $10,000 in any fiscal year without first obtaining the writ14 ten affirmative authorization for such expenditure by a 

15 majority of all shareholders. 

16 ‘‘(b) NATURE OF DECISIONS.—A decision to make a 

17 contribution or expenditure for political activities in excess 

18 of $10,000 shall not be considered a routine matter of the 

19 corporation under rules and guidelines established by any 

20 national securities exchange or by the Commission. 

21 ‘‘(c) FIDUCIARY DUTY; LIABILITY.—A violation of 

22 subsection (a) shall be considered a breach of a fiduciary 

23 duty of the officers and directors who authorized such an 

24 expenditure. The officers and directors who authorize such 

25 an expenditure without first obtaining such authorization 


hsrobinson on DSK69SOYB1PROD with BILLS
4 

•HR 4537 IH

1 of shareholders shall be jointly and severally liable in any 

2 action brought in any court of competent jurisdiction to 

3 any shareholder or class of shareholders for the amount 

4 of such expenditure. 

5 ‘‘(d) EXEMPTION FOR CERTAIN MEDIA.—The provi6 sions of this section shall not apply to an issuer whose 

7 sole business is the publication or broadcasting of news, 

8 commentary, literature, music, entertainment, artistic ex9 pression, scientific, historical or academic works, or other 

10 forms of information. The Commission shall issue such 

11 guidance as it determines necessary or appropriate regard12 ing the extent of the exemption provided by this sub13 section. 

14 ‘‘(e) DEFINITIONS.—As used in this section the fol15 lowing definitions apply: 

16 ‘‘(1) AFFIRMATIVE AUTHORIZATION.—The term 

17 ‘affirmative authorization’ means the full, free, and 

18 written consent of a shareholder, obtained without 

19 intimidation or fear of reprisal, and shall not include 

20 votes made by a broker or any other representative. 

21 ‘‘(2) ISSUE ADVOCACY CAMPAIGN.—The term 

22 ‘issue advocacy campaign’ means any expenditure 

23 for any communication to the general public in24 tended to encourage the public to contact a State or 

25 Federal Government official regarding pending legisVerDate Nov 24 2008 21:48 Jan 28, 2010 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4537.IH H4537

hsrobinson on DSK69SOYB1PROD with BILLS
5 

•HR 4537 IH

1 lation, public policy or government rule or regula2 tion, but does not include contributions or expendi3 tures for registered lobbyists employed by the cor4 poration to lobby State or Federal Government offi5 cials directly. 

6 ‘‘(3) MAJORITY OF ALL SHAREHOLDERS.—The 

7 term ‘majority of all shareholders’ means number of 

8 shareholders that combined own more than 50 per9 cent of all outstanding shares. Shareholders not 

10 casting votes shall not count toward such a majority. 

11 ‘‘(4) EXPENDITURE FOR POLITICAL ACTIVI12 TIES.— 

13 ‘‘(A) The term ‘expenditure for political 

14 activities’ means— 

15 ‘‘(i) expenditures in support of, or op16 position to, any Federal, State, or local 

17 candidate; 

18 ‘‘(ii) contributions to or expenditures 

19 in support of any political party, com20 mittee, electioneering communication, voter 

21 registration campaign, ballot measure cam22 paign, or an issue advocacy campaign; and 

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

24 associations or other tax exempt organiza25 tions that are, or could reasonably be anVerDate Nov 24 2008 21:48 Jan 28, 2010 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4537.IH H4537

hsrobinson on DSK69SOYB1PROD with BILLS
6 

•HR 4537 IH

1 ticipated to be, used for the purposes de2 scribed in subparagraphs (A) and (B). 

3 ‘‘(B) Such term shall not include— 

4 ‘‘(i) direct lobbying efforts through 

5 registered lobbyists employed or hired by 

6 the corporation; 

7 ‘‘(ii) communications by a corporation 

8 to its stockholders and executive or admin9 istrative personnel and their families; 

10 ‘‘(iii) nonpartisan registration and 

11 get-out-the-vote campaigns by a corpora12 tion aimed at its stockholders and execu13 tive or administrative personnel and their 

14 families; or 

15 ‘‘(iv) the establishment, administra16 tion and solicitation of contributions to a 

17 separate segregated fund to be utilized for 

18 political purposes by a corporation.’’. 

19 SEC. 4. REPORTING REQUIREMENTS. 

20 Section 13 of the Securities Exchange Act of 1934 

21 (15 U.S.C. 78m) is amended by adding at the end the 

22 following: 

23 ‘‘(m) REPORTING REQUIREMENTS RELATING TO

24 CERTAIN POLITICAL EXPENDITURES.— 


hsrobinson on DSK69SOYB1PROD with BILLS
7 

•HR 4537 IH

1 ‘‘(1) IN GENERAL.—Not later than 180 days 

2 after the date of enactment of this subsection, the 

3 Commission shall modify its reporting rules under 

4 this section to require issuers to disclose quarterly 

5 any expenditure for political activities (as such term 

6 is defined in section 14A(e)(4)) made during the 

7 preceding quarter. Such a report shall be filed with 

8 the Commission and provided to shareholders and 

9 shall include— 

10 ‘‘(A) the date of the contributions or ex11 penditures; 

12 ‘‘(B) the amount of the contributions or 

13 expenditures; 

14 ‘‘(C) the name or identity of the candidate, 

15 political party, committee, electioneering com16 munication, voter registration campaign, ballot 

17 measure campaign or issue advocacy campaign; 

18 ‘‘(D) if the expenditures were made for or 

19 against a candidate, including an electioneering 

20 communication, the office sought by the can21 didate and the political party affiliation of the 

22 candidate; 

23 ‘‘(E) if the contributions or expenditures 

24 were made for or against a ballot measure, the 

25 purpose of the measure and whether the conVerDate Nov 24 2008 21:48 Jan 28, 2010 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4537.IH H4537

hsrobinson on DSK69SOYB1PROD with BILLS
8 

•HR 4537 IH

1 tributions or expenditures were made in support 

2 or opposition to the ballot measure; and 

3 ‘‘(F) if the contributions or expenditures 

4 were made for or against an issue advocacy 

5 campaign, the nature of the political issue and 

6 whether the contributions were made in support 

7 or opposition to the political issue. 

8 ‘‘(2) PUBLIC AVAILABILITY.—The Commission 

9 shall ensure that, to the greatest extent practicable, 

10 the quarterly reports required by this subsection are 

11 publicly available through the Commission website in 

12 a manner that is searchable, sortable and 

13 downloadable, consistent with the requirements of 

14 section 24.’’. 

15 SEC. 5. REPORT. 

16 On an annual basis, the Office of Management and 

17 Budget shall conduct an audit on the compliance or non18 compliance with the requirements of this Act by public 

19 corporations, their management and shareholders, as well 

20 as the effectiveness of the Securities and Exchange Com21 mission in meeting the reporting and disclosure require22 ments of this Act. Not later than April 1 of each year, 

23 the Office of Management and Budget shall submit to the 


hsrobinson on DSK69SOYB1PROD with BILLS
9 

•HR 4537 IH

1 President a report on the audit activities required under 

2 this Act. 

Æ 


hsrobinson on DSK69SOYB1PROD with BILLS