I 

116TH CONGRESS 

1ST SESSION H. R. 4491 

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 

SEPTEMBER 25, 2019 

Mr. MALINOWSKI (for himself and Mr. CLEAVER) 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’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds that— 


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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; 

5 (2) decisions to use corporate funds for political 

6 contributions and expenditures are usually made by 

7 corporate boards and executives, rather than share8 holders; 

9 (3) corporations, acting through boards and ex10 ecutives, are obligated to conduct business for the 

11 best interests of their owners, the shareholders; 

12 (4) historically, shareholders have not had a 

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

14 of the corporations they own; 

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

16 know how corporate managers are spending com17 pany funds to make political contributions and ex18 penditures benefitting candidates, political parties, 

19 and political causes; 

20 (6) corporations should be accountable to share21 holders in making political contributions or expendi22 tures affecting Federal governance and public policy; 

23 and 

24 (7) requiring a corporation to obtain the ex25 press approval of shareholders before making politVerDate Sep 11 2014 02:36 Oct 01, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4491.IH H4491

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1 ical contributions or expenditures will establish nec2 essary accountability. 

3 SEC. 3. SHAREHOLDER APPROVAL OF CORPORATE POLIT4 ICAL ACTIVITY. 

5 (a) IN GENERAL.—The Securities Exchange Act of 

6 1934 (15 U.S.C. 78a et seq.) is amended by inserting after 

7 section 14B (15 U.S.C. 78n–2) the following: 

8 ‘‘SEC. 14C. SHAREHOLDER APPROVAL OF CERTAIN POLIT9 ICAL EXPENDITURES AND DISCLOSURE OF 

10 VOTES OF INSTITUTIONAL INVESTORS. 

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

12 ‘‘(1) the term ‘expenditure for political activi13 ties’— 

14 ‘‘(A) means— 

15 ‘‘(i) an independent expenditure (as 

16 defined in section 301(17) of the Federal 

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

18 30101(17))); 

19 ‘‘(ii) an electioneering communication 

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

21 (52 U.S.C. 30104(f)(3))) and any other 

22 public communication (as defined in sec23 tion 301(22) of that Act (52 U.S.C. 

24 30101(22))) that would be an electionVerDate Sep 11 2014 02:36 Oct 01, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4491.IH H4491

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1 eering communication if it were a broad2 cast, cable, or satellite communication; or 

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

4 associations or organizations described in 

5 section 501(c) of the Internal Revenue 

6 Code of 1986 and exempt from tax under 

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

8 could reasonably be anticipated to be, used 

9 or transferred to another association or or10 ganization for the purposes described in 

11 clauses (i) or (ii); and 

12 ‘‘(B) does not include— 

13 ‘‘(i) direct lobbying efforts through 

14 registered lobbyists employed or hired by 

15 the issuer; 

16 ‘‘(ii) communications by an issuer to 

17 its shareholders and executive or adminis18 trative personnel and their families; or 

19 ‘‘(iii) the establishment, administra20 tion, and solicitation of contributions to a 

21 separate segregated fund to be utilized for 

22 political purposes by a corporation; and 

23 ‘‘(2) the term ‘issuer’ does not include an in24 vestment company that is registered under section 8 


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1 of the Investment Company Act of 1940 (15 U.S.C. 

2 80a–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 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 may make an expenditure for political activities 

24 in any fiscal year unless that 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) by an issuer shall be considered to be a 

9 breach of a fiduciary duty of any officer or director 

10 of the issuer who authorized the expenditure for po11 litical activities described in that subsection. 

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

13 issuer who authorizes an expenditure for political ac14 tivities in violation of subsection (c) shall be jointly 

15 and severally liable in— 

16 ‘‘(A) any action brought in a court of com17 petent jurisdiction to any person or class of per18 sons that held shares at the time the expendi19 ture for political activities was made; and 

20 ‘‘(B) an amount that is equal to 3 times 

21 the amount of the expenditure for political ac22 tivities. 

23 ‘‘(e) DISCLOSURE OF VOTES.— 

24 ‘‘(1) DISCLOSURE REQUIRED.—Each institu25 tional investment manager that is subject to section 


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1 13(f) shall disclose not less frequently than annually 

2 how the institutional investment manager voted on 

3 any shareholder vote under subsection (a), unless 

4 the vote is otherwise required by rule of the Com5 mission to be reported publicly. 

6 ‘‘(2) RULES.—Not later than 180 days after 

7 the date of enactment of this section, the Commis8 sion shall issue rules to carry out this subsection 

9 that require that a disclosure required under para10 graph (1)— 

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

12 the date on which a vote described in that para13 graph is held; and 

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

15 through the EDGAR system as soon as prac16 ticable. 

17 ‘‘(f) SAFE HARBOR FOR CERTAIN DIVESTMENT DE18 CISIONS.—Notwithstanding any other provision of Federal 

19 or State law, if an institutional investment manager makes 

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

21 may bring any civil, criminal, or administrative action 

22 against the institutional investment manager, or any em23 ployee, officer, or director of the institutional investment 

24 manager, based solely upon a decision of the investment 

25 manager to divest from, or not to invest in, securities of 


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1 an issuer due to an expenditure for political activities 

2 made by the issuer.’’. 

3 (b) TECHNICAL AND CONFORMING AMENDMENT.— 

4 Section 3(a)(8) of the Securities Exchange Act of 1934 

5 (15 U.S.C. 78c(a)(8)) is amended by striking ‘‘The term’’ 

6 and inserting ‘‘Except as otherwise expressly provided, the 

7 term’’. 

8 SEC. 4. REQUIRED BOARD VOTE ON CORPORATE EXPENDI9 TURES FOR POLITICAL ACTIVITIES. 

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

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

12 78p) the following: 

13 ‘‘SEC. 16A. REQUIRED BOARD VOTE ON CORPORATE EX14 PENDITURES FOR POLITICAL ACTIVITIES. 

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

16 ‘‘(1) the term ‘election’ has the meaning given 

17 the term in section 301 of the Federal Election 

18 Campaign Act of 1971 (52 U.S.C. 30101); and 

19 ‘‘(2) the terms ‘expenditure for political activi20 ties’ and ‘issuer’ have the meanings given the terms 

21 in section 14C. 

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

23 days after the date of enactment of this section, the Com24 mission shall, by rule, direct the national securities ex25 changes and national securities associations to prohibit the 


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

2 is not in compliance with the requirements of any portion 

3 of subsection (c). 

4 ‘‘(c) REQUIREMENT FOR VOTE IN CORPORATE BY5 LAWS.— 

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

7 issuer shall expressly provide for a vote of the board 

8 of directors of the issuer on any expenditure for po9 litical activities— 

10 ‘‘(A) in an amount that is more than 

11 $50,000; and 

12 ‘‘(B) that would result in the total amount 

13 spent by the issuer for a particular election to 

14 be more than $50,000. 

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

16 make the votes of each member of the board of di17 rectors of the issuer for a vote required under para18 graph (1) publicly available not later than 48 hours 

19 after the vote, including in a clear and conspicuous 

20 location on the internet website of the issuer. 

21 ‘‘(d) NO EFFECT ON DETERMINATION OF COORDINA22 TION WITH CANDIDATES OR CAMPAIGNS.—For purposes 

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

24 30101 et seq.), an expenditure for political activities by 

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1 operation with, or at the request or suggestion of, any can2 didate or committee solely because a member of the board 

3 of directors of the issuer voted on the expenditure as re4 quired under this section.’’. 

5 SEC. 5. REPORTING REQUIREMENTS. 

6 Section 13 of the Securities Exchange Act of 1934 

7 (15 U.S.C. 78m) is amended by adding at the end the 

8 following: 

9 ‘‘(s) REPORTING REQUIREMENTS RELATING TO CER10 TAIN POLITICAL EXPENDITURES.— 

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

12 terms ‘expenditure for political activities’ and 

13 ‘issuer’ have the meanings given the terms in section 

14 14C. 

15 ‘‘(2) QUARTERLY REPORTS.— 

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

17 180 days after the date of enactment of this 

18 subsection, the Commission shall amend the re19 porting rules under this section to require each 

20 issuer with a class of equity securities reg21 istered under section 12 to submit to the Com22 mission and the shareholders of the issuer a 

23 quarterly report containing— 


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1 ‘‘(i) a description of any expenditure 

2 for political activities made during the pre3 ceding quarter; 

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

5 political activities; 

6 ‘‘(iii) the amount of each expenditure 

7 for political activities; 

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

9 board of directors of the issuer authorizing 

10 the expenditure for political activity, as re11 quired under section 16A(c); 

12 ‘‘(v) if the expenditure for political ac13 tivities was made in support of or in oppo14 sition to a candidate, the name of the can15 didate and the office sought by, and the 

16 political party affiliation of, the candidate; 

17 and 

18 ‘‘(vi) the name or identity of trade as19 sociations or organizations described in 

20 section 501(c) of the Internal Revenue 

21 Code of 1986 and exempt from tax under 

22 section 501(a) of such Code that receive 

23 dues or other payments as described in 

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


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1 ‘‘(B) PUBLIC AVAILABILITY.—The Com2 mission shall ensure that, to the greatest extent 

3 practicable, the quarterly reports required 

4 under this paragraph are publicly available 

5 through the internet website of the Commission 

6 and through the EDGAR system in a manner 

7 that is searchable, sortable, and downloadable, 

8 consistent with the requirements under section 

9 24. 

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

11 days after the date of enactment of this subsection, 

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

13 include in the annual report of the issuer to share14 holders a summary of each expenditure for political 

15 activities made during the preceding year in excess 

16 of $10,000, and each expenditure for political activi17 ties for a particular election if the total amount of 

18 such expenditures for that election is in excess of 

19 $10,000.’’. 

20 SEC. 6. REPORTS. 

21 (a) SECURITIES AND EXCHANGE COMMISSION.—The 

22 Securities and Exchange Commission shall— 

23 (1) conduct an annual assessment of the com24 pliance of issuers and officers and members of the 

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


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1 14C, and 16A of the Securities Exchange Act of 

2 1934, as added by this Act; and 

3 (2) submit to Congress an annual report con4 taining the results of the assessment under para5 graph (1). 

6 (b) GOVERNMENT ACCOUNTABILITY OFFICE.—The 

7 Comptroller General of the United States shall periodically 

8 evaluate and report to Congress on the effectiveness of the 

9 oversight by the Securities and Exchange Commission of 

10 the reporting and disclosure requirements under sections 

11 13(s), 14C, and 16A of the Securities Exchange Act of 

12 1934, as added by this Act. 

13 SEC. 7. SEVERABILITY. 

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

15 this Act, or the application of such provision or amend16 ment to any person or circumstance is held to be unconsti17 tutional, the remainder of this Act, the amendments made 

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

19 amendment to any person or circumstance shall not be af20 fected thereby. 

Æ 


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