I 
116TH CONGRESS 
1ST SESSION H. R. 4491 
To amend the Securities Exchange Act of 1934 to require shareholder author-
ization 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 pur-
poses. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Shareholder Protection 
Act’’. 
SEC. 2. FINDINGS. 
Congress finds that— 
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(1) corporations make significant political con-
tributions and expenditures that directly or indi-
rectly influence the election of candidates and sup-
port or oppose political causes; 
(2) decisions to use corporate funds for political 
contributions and expenditures are usually made by 
corporate boards and executives, rather than share-
holders; 
(3) corporations, acting through boards and ex-
ecutives, are obligated to conduct business for the 
best interests of their owners, the shareholders; 
(4) historically, shareholders have not had a 
way to know, or to influence, the political activities 
of the corporations they own; 
(5) shareholders and the public have a right to 
know how corporate managers are spending com-
pany funds to make political contributions and ex-
penditures benefitting candidates, political parties, 
and political causes; 
(6) corporations should be accountable to share-
holders in making political contributions or expendi-
tures affecting Federal governance and public policy; 
and 
(7) requiring a corporation to obtain the ex-
press approval of shareholders before making polit-
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eering communication if it were a broad-
cast, cable, or satellite communication; or 
‘‘(iii) dues or other payments to trade 
associations or organizations described in 
section 501(c) of the Internal Revenue 
Code of 1986 and exempt from tax under 
section 501(a) of that Code that are, or 
could reasonably be anticipated to be, used 
or transferred to another association or or-
ganization for the purposes described in 
clauses (i) or (ii); and 
‘‘(B) does not include— 
‘‘(i) direct lobbying efforts through 
registered lobbyists employed or hired by 
the issuer; 
‘‘(ii) communications by an issuer to 
its shareholders and executive or adminis-
trative personnel and their families; or 
‘‘(iii) the establishment, administra-
tion, and solicitation of contributions to a 
separate segregated fund to be utilized for 
political purposes by a corporation; and 
‘‘(2) the term ‘issuer’ does not include an in-
vestment company that is registered under section 8 
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of the Investment Company Act of 1940 (15 U.S.C. 
80a–8). 
‘‘(b) SHAREHOLDER AUTHORIZATION
FOR POLIT-
ICAL EXPENDITURES.—Each solicitation of proxy, con-
sent, or authorization by an issuer with a class of equity 
securities registered under section 12 shall— 
‘‘(1) contain— 
‘‘(A) a description of the specific nature of 
any expenditure for political activities proposed 
to be made by the issuer for the forthcoming 
fiscal year that has not been authorized by a 
vote of the shareholders of the issuer, to the ex-
tent the specific nature is known to the issuer; 
and 
‘‘(B) the total amount of expenditures for 
political activities proposed to be made by the 
issuer for the forthcoming fiscal year; and 
‘‘(2) provide for a separate vote of the share-
holders of the issuer to authorize such expenditures 
for political activities in the total amount described 
in paragraph (1). 
‘‘(c) VOTE REQUIRED TO MAKE EXPENDITURES.— 
No issuer may make an expenditure for political activities 
in any fiscal year unless that expenditure— 
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‘‘(1) is of the nature of those proposed by the 
issuer in subsection (b)(1); and 
‘‘(2) has been authorized by a vote of the ma-
jority of the outstanding shares of the issuer in ac-
cordance with subsection (b)(2). 
‘‘(d) FIDUCIARY DUTY; LIABILITY.— 
‘‘(1) FIDUCIARY
DUTY.—A violation of sub-
section (c) by an issuer shall be considered to be a 
breach of a fiduciary duty of any officer or director 
of the issuer who authorized the expenditure for po-
litical activities described in that subsection. 
‘‘(2) LIABILITY.—An officer or director of an 
issuer who authorizes an expenditure for political ac-
tivities in violation of subsection (c) shall be jointly 
and severally liable in— 
‘‘(A) any action brought in a court of com-
petent jurisdiction to any person or class of per-
sons that held shares at the time the expendi-
ture for political activities was made; and 
‘‘(B) an amount that is equal to 3 times 
the amount of the expenditure for political ac-
tivities. 
‘‘(e) DISCLOSURE OF VOTES.— 
‘‘(1) DISCLOSURE
REQUIRED.—Each institu-
tional investment manager that is subject to section 
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13(f) shall disclose not less frequently than annually 
how the institutional investment manager voted on 
any shareholder vote under subsection (a), unless 
the vote is otherwise required by rule of the Com-
mission to be reported publicly. 
‘‘(2) RULES.—Not later than 180 days after 
the date of enactment of this section, the Commis-
sion shall issue rules to carry out this subsection 
that require that a disclosure required under para-
graph (1)— 
‘‘(A) be made not later than 30 days after 
the date on which a vote described in that para-
graph is held; and 
‘‘(B) be made available to the public 
through the EDGAR system as soon as prac-
ticable. 
‘‘(f) SAFE HARBOR FOR CERTAIN DIVESTMENT DE-
CISIONS.—Notwithstanding any other provision of Federal 
or State law, if an institutional investment manager makes 
the disclosures required under subsection (e), no person 
may bring any civil, criminal, or administrative action 
against the institutional investment manager, or any em-
ployee, officer, or director of the institutional investment 
manager, based solely upon a decision of the investment 
manager to divest from, or not to invest in, securities of 
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an issuer due to an expenditure for political activities 
made by the issuer.’’. 
(b) TECHNICAL AND CONFORMING AMENDMENT.— 
Section 3(a)(8) of the Securities Exchange Act of 1934 
(15 U.S.C. 78c(a)(8)) is amended by striking ‘‘The term’’ 
and inserting ‘‘Except as otherwise expressly provided, the 
term’’. 
SEC. 4. REQUIRED BOARD VOTE ON CORPORATE EXPENDI-
TURES FOR POLITICAL ACTIVITIES. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by adding after section 16 (15 U.S.C. 
78p) the following: 
‘‘SEC. 16A. REQUIRED BOARD VOTE ON CORPORATE EX-
PENDITURES FOR POLITICAL ACTIVITIES. 
‘‘(a) DEFINITIONS.—In this section— 
‘‘(1) the term ‘election’ has the meaning given 
the term in section 301 of the Federal Election 
Campaign Act of 1971 (52 U.S.C. 30101); and 
‘‘(2) the terms ‘expenditure for political activi-
ties’ and ‘issuer’ have the meanings given the terms 
in section 14C. 
‘‘(b) LISTING ON EXCHANGES.—Not later than 180 
days after the date of enactment of this section, the Com-
mission shall, by rule, direct the national securities ex-
changes and national securities associations to prohibit the 
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listing of any class of equity security of an issuer that 
is not in compliance with the requirements of any portion 
of subsection (c). 
‘‘(c) REQUIREMENT FOR VOTE IN CORPORATE BY-
LAWS.— 
‘‘(1) VOTE
REQUIRED.—The bylaws of an 
issuer shall expressly provide for a vote of the board 
of directors of the issuer on any expenditure for po-
litical activities— 
‘‘(A) in an amount that is more than 
$50,000; and 
‘‘(B) that would result in the total amount 
spent by the issuer for a particular election to 
be more than $50,000. 
‘‘(2) PUBLIC
AVAILABILITY.—An issuer shall 
make the votes of each member of the board of di-
rectors of the issuer for a vote required under para-
graph (1) publicly available not later than 48 hours 
after the vote, including in a clear and conspicuous 
location on the internet website of the issuer. 
‘‘(d) NO EFFECT ON DETERMINATION OF COORDINA-
TION WITH CANDIDATES OR CAMPAIGNS.—For purposes 
of the Federal Election Campaign Act of 1971 (52 U.S.C. 
30101 et seq.), an expenditure for political activities by 
an issuer shall not be treated as made in concert or co-
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