IB 
Union Calendar No. 362 
111TH CONGRESS 
2D SESSION 
H. R. 4790 
[Report No. 111–620, Part I] 
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 
MARCH 9, 2010 
Mr. CAPUANO (for himself, Mr. ACKERMAN, Mr. FILNER, Mr. GRAYSON, Mr. 
HIMES, Mr. HOLT, Mrs. MALONEY, Mr. PALLONE, Mr. PETERS, and Ms. 
ROYBAL-ALLARD) introduced the following bill; which was referred to the 
Committee on Financial Services, and in addition to the Committee on 
House Administration, for a period to be subsequently determined by the 
Speaker, in each case for consideration of such provisions as fall within 
the jurisdiction of the committee concerned 
SEPTEMBER 22, 2010 
Reported from the Committee on Financial Services with an amendment 
[Strike out all after the enacting clause and insert the part printed in italic] 
SEPTEMBER 22, 2010 
Additional sponsors: Mr. FRANK of Massachusetts, Mr. MCGOVERN, Ms. 
MOORE of Wisconsin, Mr. ROTHMAN of New Jersey, Mr. GARAMENDI, 
Mr. GUTIERREZ, Ms. KILROY, Mr. LARSON
of Connecticut, Mr. 
PASCRELL, Mr. CUMMINGS, Mr. HEINRICH, Ms. WATERS, Mr. WEINER, 
Mr. GRIJALVA, Mr. CONYERS, Mr. GENE GREEN of Texas, Mr. HODES, 
Mr. LYNCH, Mrs. NAPOLITANO, Mr. OLVER, Mr. SARBANES, Ms. WOOL-
SEY, Mr. BLUMENAUER, Mr. FOSTER, Mr. HINCHEY, Ms. KILPATRICK of 
Michigan, Ms. HIRONO, Ms. LINDA T. SA´NCHEZ of California, Ms. SHEA- 
PORTER, Ms. DELAURO, Mr. HALL of New York, Ms. WATSON, Mr. 
WELCH, Ms. EDWARDS of Maryland, Mr. JACKSON of Illinois, Mr. 
PERLMUTTER, Mr. POLIS of Colorado, Mr. SHERMAN, Mr. CLAY, and Ms. 
NORTON 
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SEPTEMBER 22, 2010 
Committee on House Administration discharged; committed to the Committee 
of the Whole House on the State of the Union and ordered to be printed 
[For text of introduced bill, see copy of bill as introduced on March 9, 2010] 
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. 
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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 of 2010’’. 
SEC. 2. FINDINGS. 
Congress finds the following: 
(1) Corporations make significant political con-
tributions and expenditures that directly or indirectly 
influence the election of candidates and support or 
oppose political causes. Decisions to use corporate 
funds for political contributions and expenditures are 
usually made by corporate boards and executives, 
rather than shareholders. 
(2) Corporations, acting through their boards 
and executives, are obligated to conduct business for 
the best interests of their owners, the shareholders. 
(3) Historically, shareholders have not had a 
way to know, or to influence, the political activities 
of corporations they own. Shareholders and the public 
have a right to know how corporations are spending 
their funds to make political contributions or expend-
itures benefitting candidates, political parties, and 
political causes. 
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(4) Corporations should be accountable to their 
shareholders in making political contributions or ex-
penditures affecting Federal governance and public 
policy. Requiring the express approval of a corpora-
tion’s shareholders prior to making political contribu-
tions or expenditures will establish necessary account-
ability. 
SEC. 3. SHAREHOLDER APPROVAL OF CORPORATE POLIT-
ICAL ACTIVITY. 
The Securities Exchange Act of 1934 is amended by 
inserting after section 14B the following new section: 
‘‘SEC. 14C. SHAREHOLDER APPROVAL OF CERTAIN POLIT-
ICAL EXPENDITURES AND DISCLOSURE OF 
VOTES OF INSTITUTIONAL INVESTORS. 
‘‘(a) SHAREHOLDER AUTHORIZATION FOR POLITICAL 
EXPENDITURES.—Any solicitation of any proxy or consent 
or authorization in respect of any security of an issuer 
shall— 
‘‘(1) contain a description of the specific nature 
of any expenditures for political activities proposed to 
be made by the issuer for the forthcoming fiscal year 
not previously approved, to the extent the specific na-
ture is known to the issuer and including the total 
amount of such proposed expenditures; and 
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‘‘(2) provide for a separate shareholder vote to 
authorize such proposed expenditures in such amount. 
‘‘(b) REQUIREMENTS FOR EXPENDITURES.—No issuer 
shall make any expenditure for political activities in any 
fiscal year unless— 
‘‘(1) such expenditure is of the nature of those 
proposed by the issuer pursuant to subsection (a)(1); 
and 
‘‘(2) authorization for such expenditures has been 
granted by votes representing a majority of out-
standing shares pursuant to subsection (a)(2). 
‘‘(c) FIDUCIARY DUTY; LIABILITY.—A violation of sub-
section (b) shall be considered a breach of a fiduciary duty 
of the officers and directors who authorized such an expend-
iture. The officers and directors who authorize such an ex-
penditure without first obtaining such authorization of 
shareholders shall be jointly and severally liable in any ac-
tion brought in any court of competent jurisdiction to any 
individual or class of individuals who held shares at the 
time such expenditure was made for an amount equal to 
3 times the amount of such expenditure. 
‘‘(d) DEFINITION OF EXPENDITURE FOR POLITICAL 
ACTIVITIES.—As used in this section: 
‘‘(1) The term ‘expenditure for political activi-
ties’ means— 
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‘‘(A) an independent expenditure, as such 
term is defined in section 301(17) of the Federal 
Election Campaign Act of 1971 (2 U.S.C. 
431(17)); 
‘‘(B) an electioneering communication, as 
such term is defined in section 304(f)(3) of such 
Act (2 U.S.C. 434(f)(3)) and any other public 
communication (as such term is defined in sec-
tion 301(22) of such Act (2 U.S.C. 431(22))) that 
would be an electioneering communication if it 
were a broadcast, cable, or satellite communica-
tion; or 
‘‘(C) dues or other payments to trade asso-
ciations or other tax exempt organizations that 
are, or could reasonably be anticipated to be, 
used or transferred to another association or or-
ganization for the purposes described in subpara-
graph (A) or (B). 
‘‘(2) Such term shall not include— 
‘‘(A) direct lobbying efforts through reg-
istered lobbyists employed or hired by the issuer; 
‘‘(B) communications by an issuer to its 
shareholders and executive or administrative per-
sonnel and their families; or 
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‘‘(C) the establishment and administration 
of contributions to a separate segregated fund to 
be utilized for political purposes by a corpora-
tion. 
‘‘(e) DISCLOSURE OF VOTES.—Every institutional in-
vestment manager subject to section 13(f) shall report at 
least annually how it voted on any shareholder vote pursu-
ant to subsection (a), unless such vote is otherwise required 
to be reported publicly by rule or regulation of the Commis-
sion. Not later than 6 months after the date of enactment 
of this section, the Commission shall issue rules and regula-
tions to implement this subsection. Such rules shall require 
that such report be made not later than 30 days after such 
a vote and be made available to the public through the 
EDGAR system as soon as practicable. 
‘‘(f) SAFE HARBOR FOR CERTAIN DIVESTMENT DECI-
SIONS.—Notwithstanding any other provision of Federal or 
State law, no person may bring any civil, criminal, or ad-
ministrative action against any institutional investment 
manager, or any employee, officer, or director thereof, based 
solely upon a decision of the investment manager to divest 
from, or not to invest in, securities of an issuer because 
of expenditures for political activities made by that issuer. 
This subsection shall not apply to any institutional invest-
ment manager, or any employee, officer, or director thereof, 
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unless the institutional investment manager makes disclo-
sures in accordance with regulations prescribed by the Com-
mission.’’. 
SEC. 4. REQUIRED BOARD VOTE ON CORPORATE EXPENDI-
TURES FOR POLITICAL ACTIVITIES. 
(a) REQUIRED VOTE.—The Securities Exchange Act of 
1934 is amended by adding after section 16 the following 
new section: 
‘‘SEC. 16A. REQUIRED BOARD VOTE ON CORPORATE EX-
PENDITURES FOR POLITICAL ACTIVITIES. 
‘‘(a) LISTING
ON EXCHANGES.—Effective not later 
than 180 days after the date of enactment of this section, 
the Commission shall, by rule, direct the national securities 
exchanges and national securities associations to prohibit 
the listing of any class of equity security of an issuer that 
is not in compliance with the requirements of any portion 
of subsection (b). 
‘‘(b) REQUIREMENT FOR VOTE IN CORPORATE BY-
LAWS.—The corporate bylaws of an issuer shall expressly 
provide for a vote of the directors of the issuer on any indi-
vidual expenditure for political activities (as such term is 
defined in section 14C(d)(1)) in excess of $50,000, or any 
expenditure that makes the total amount spent by the issuer 
for the particular election (as such term is defined in sec-
tion 301(1) of the Federal Election Campaign Act of 1971 
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