I 
112TH CONGRESS 
1ST SESSION H. R. 2517 
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 
JULY 13, 2011 
Mr. CAPUANO
(for himself, Mr. ACKERMAN, Mr. BLUMENAUER, Mr. 
BUTTERFIELD, Mr. COHEN, Mr. CONYERS, Mr. DEFAZIO, Ms. 
DELAURO, Ms. EDWARDS, Mr. ELLISON, Ms. ESHOO, Mr. FILNER, Mr. 
GRIJALVA, Mr. HEINRICH, Mr. HINCHEY, Ms. HIRONO, Mr. JACKSON of 
Illinois, Ms. KAPTUR, Mr. LARSON of Connecticut, Ms. LEE of California, 
Mr. LYNCH, Mrs. MALONEY, Mr. MCDERMOTT, Mr. MCGOVERN, Ms. 
MOORE, Mr. MORAN, Ms. NORTON, Mr. OLVER, Mr. PALLONE, Mr. PAS-
CRELL, Ms. PINGREE of Maine, Mr. POLIS, Mr. RANGEL, Mr. ROTHMAN 
of New Jersey, Ms. ROYBAL-ALLARD, Mr. SARBANES, Ms. SLAUGHTER, 
Mr. STARK, Mr. TONKO, Ms. WATERS, Mr. WELCH, Ms. WOOLSEY, and 
Mr. YARMUTH) 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, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Shareholder Protection 
Act of 2011’’. 
SEC. 2. FINDINGS. 
Congress finds the following: 
(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. Decisions to use cor-
porate funds for political contributions and expendi-
tures are usually made by corporate boards and ex-
ecutives, 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 pub-
lic have a right to know how corporations are spend-
ing their funds to make political contributions and 
expenditures benefitting candidates, political parties, 
and political causes. 
(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-
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tion’s shareholders prior to making political con-
tributions or expenditures will establish necessary 
accountability. 
SEC. 3. SHAREHOLDER APPROVAL OF CORPORATE POLIT-
ICAL ACTIVITY. 
The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by inserting after section 14B (15 
U.S.C. 78n–2) the following: 
‘‘SEC. 14C. SHAREHOLDER APPROVAL OF CERTAIN POLIT-
ICAL EXPENDITURES AND DISCLOSURE OF 
VOTES OF INSTITUTIONAL INVESTORS. 
‘‘(a) DEFINITIONS.—In this section— 
‘‘(1) the term ‘expenditure for political activi-
ties’— 
‘‘(A) means— 
‘‘(i) 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)); 
‘‘(ii) 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 section 301(22) of 
such Act (2 U.S.C. 431(22))) that would 
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be an electioneering communication if it 
were a broadcast, cable, or satellite com-
munication; 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 such 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 and adminis-
tration of contributions to a separate seg-
regated fund to be utilized for political 
purposes by a corporation; and 
‘‘(2) the term ‘issuer’ does not include an in-
vestment company registered under section 8 of the 
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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 of this title 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 shall make an expenditure for political activities 
in any fiscal year unless such 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) shall be considered a breach of a fidu-
ciary duty of the officers and directors who author-
ized the expenditure for political activities. 
‘‘(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 any action brought in a court 
of competent jurisdiction to any person or class of 
persons who held shares at the time the expenditure 
for political activities was made for an amount equal 
to 3 times the amount of the expenditure for polit-
ical activities. 
‘‘(e) DISCLOSURE OF VOTES.— 
‘‘(1) DISCLOSURE
REQUIRED.—Each institu-
tional investment manager subject to section 13(f) 
shall disclose not less frequently than annually how 
it voted on any shareholder vote under subsection 
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(a), unless the vote is otherwise required by rule of 
the Commission to be reported publicly. 
‘‘(2) RULES.—Not later than 6 months 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 
a vote described in paragraph (1); 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 thereof, based solely upon a de-
cision of the investment manager to divest from, or not 
to invest in, securities of an issuer due to an expenditure 
for political activities made by the issuer.’’. 
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SEC. 4. REQUIRED BOARD VOTE ON CORPORATE EXPENDI-
TURES FOR POLITICAL ACTIVITIES. 
The Securities Exchange Act of 1934 (15 U.S.C. 78 
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, the terms ‘ex-
penditure for political activities’ and ‘issuer’ have the same 
meaning as 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 
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— 
‘‘(A) any expenditure for political activities 
in excess of $50,000; and 
‘‘(B) any expenditure for political activities 
that would result in the total amount spent by 
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the issuer for a particular election (as such 
term is defined in section 301(1) of the Federal 
Election Campaign Act of 1971 (2 U.S.C. 
431(1))) in excess of $50,000. 
‘‘(2) PUBLIC
AVAILABILITY.—An issuer shall 
make the votes of each member of the board of di-
rectors for a vote required under paragraph (1) pub-
licly available not later than 48 hours after the vote, 
including in a clear and conspicuous location on the 
Web site 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, an expend-
iture for political activities by an issuer shall not be treat-
ed as made in concert or cooperation with, or at the re-
quest or suggestion of, any candidate or committee solely 
because a member of the board of directors of the issuer 
voted on the expenditure as required under this section.’’. 
SEC. 5. REPORTING REQUIREMENTS. 
Section 13 of the Securities Exchange Act of 1934 
(15 U.S.C. 78m) is amended by adding at the end the 
following: 
‘‘(r) REPORTING REQUIREMENTS RELATING TO CER-
TAIN POLITICAL EXPENDITURES.— 
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‘‘(1) DEFINITIONS.—In this subsection, the 
terms ‘expenditure for political activities’ and 
‘issuer’ have the same meaning as in section 14C. 
‘‘(2) QUARTERLY REPORTS.— 
‘‘(A) REPORTS REQUIRED.—Not later than 
180 days after the date of enactment of this 
subsection, the Commission shall amend the re-
porting rules under this section to require each 
issuer with a class of equity securities reg-
istered under section 12 of this title to submit 
to the Commission and the shareholders of the 
issuer a quarterly report containing— 
‘‘(i) a description of any expenditure 
for political activities made during the pre-
ceding quarter; 
‘‘(ii) the date of each expenditure for 
political activities; 
‘‘(iii) the amount of each expenditure 
for political activities; 
‘‘(iv) the votes of each member of the 
board of directors authorizing the expendi-
ture for political activity, as required under 
section 16A(c); 
‘‘(v) if the expenditure for political ac-
tivities was made in support of or opposed 
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to a candidate, the name of the candidate 
and the office sought by, and the political 
party affiliation of, the candidate; and 
‘‘(vi) the name or identity of trade as-
sociations or organizations described in 
section 501(c) of the Internal Revenue 
Code of 1986 and exempt from tax under 
section 501(a) of such Code which receive 
dues or other payments as described in 
section 14C(a)(1)(A)(iii). 
‘‘(B) PUBLIC
AVAILABILITY.—The Com-
mission shall ensure that, to the greatest extent 
practicable, the quarterly reports required 
under this paragraph are publicly available 
through the Web site of the Commission and 
through the EDGAR system in a manner that 
is searchable, sortable, and downloadable, con-
sistent with the requirements under section 24. 
‘‘(3) ANNUAL REPORTS.—Not later than 180 
days after the date of enactment of this subsection, 
the Commission shall, by rule, require each issuer to 
include in the annual report of the issuer to share-
holders a summary of each expenditure for political 
activities made during the preceding year in excess 
of $10,000, and each expenditure for political activi-
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ties for a particular election if the total amount of 
such expenditures for that election is in excess of 
$10,000.’’. 
SEC. 6. REPORTS. 
(a) SECURITIES AND EXCHANGE COMMISSION.—The 
Securities and Exchange Commission shall— 
(1) conduct an annual assessment of the com-
pliance of issuers and officers and members of the 
boards of directors of issuers with sections 14C, 
16A, and 13(r) of the Securities Exchange Act, as 
added by this Act; and 
(2) submit to Congress an annual report of con-
taining the results of the assessment under para-
graph (1). 
(b) GOVERNMENT ACCOUNTABILITY OFFICE.—The 
Comptroller General of the United States shall periodically 
evaluate and report to Congress on the effectiveness of the 
oversight by the Securities and Exchange Commission of 
the reporting and disclosure requirements under sections 
14C, 16A, and 13(r) of the Securities Exchange Act, as 
added by this Act. 
SEC. 7. SEVERABILITY. 
If any provision of this Act, an amendment made by 
this Act, or the application of such provision or amend-
ment to any person or circumstance is held to be unconsti-
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tutional, the remainder of this Act, the amendments made 
by this Act, and the application of such provision or 
amendment to any person or circumstance shall not be af-
fected thereby. 
Æ 
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