S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  43--A

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 7, 2015
                               ___________

Introduced  by  Sen. HOYLMAN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Corporations,  Authorities
  and  Commissions  --  recommitted  to  the  Committee on Corporations,
  Authorities and Commissions in accordance with Senate Rule 6,  sec.  8
  --  committee  discharged,  bill amended, ordered reprinted as amended
  and recommitted to said committee

AN ACT to amend the business corporation law, in relation  to  requiring
  the  authorization of certain political expenditures by the sharehold-
  ers and the board of directors of public corporations; and to  require
  the comptroller to annually conduct a study on the compliance with the
  requirements of this act by public corporations and their management

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. This act shall be known and may be cited as the  "New  York
shareholder protection act of 2016".
  S  2.  Legislative  intent  and  purpose. The legislature hereby finds
that:
  a. Corporations make significant political contributions and  expendi-
tures  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  corpo-
rate boards and executives, rather than shareholders.
  b. Corporations, acting through their boards and executives, are obli-
gated  to  conduct  business for the best interests of their owners, the
shareholders.
  c. Historically, shareholders have not had a way to know, or to influ-
ence, 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 expenditures benefitting candi-
dates, political parties, and political causes.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD01376-02-6

S. 43--A                            2

  d. Corporations should be accountable to their shareholders in  making
political contributions or expenditures affecting Federal governance and
public policy.  Requiring the express approval of a corporation's share-
holders  prior  to  making  political contributions or expenditures will
establish necessary accountability.
  S  3.  The  business  corporation  law  is  amended  by adding two new
sections 609-a and 609-b to read as follows:
S 609-A. SHAREHOLDER APPROVAL OF CORPORATE  EXPENDITURES  FOR  POLITICAL
           ACTIVITIES.
  (A)  NOTWITHSTANDING  ANY PROVISION OF LAW TO THE CONTRARY, NO PUBLIC-
LY-HELD CORPORATION INCORPORATED  IN  THIS  STATE  AND  SUBJECT  TO  THE
PROVISIONS  OF  THIS  CHAPTER  SHALL MAKE ANY EXPENDITURE FOR OR TO FUND
STATE, FEDERAL OR LOCAL POLITICAL ACTIVITIES IN ANY FISCAL  YEAR  UNLESS
SUCH  EXPENDITURE  IS APPROVED IN ADVANCE BY A QUORUM OF SHAREHOLDERS OF
ALL CLASSES AND SERIES OF SHARES OF THE CORPORATION.
  (B) ANY SOLICITATION OF ANY PROXY OR CONSENT OR AUTHORIZATION  SEEKING
APPROVAL  OF  POLITICAL  EXPENDITURES  BY  OR ON BEHALF OF A CORPORATION
SHALL BE SUBJECT TO ALL REQUIREMENTS OF SECTION 609 (PROXIES) AND 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, TO THE EXTENT THE SPECIFIC NATURE IS  KNOWN  TO
THE ISSUER AND INCLUDING THE TOTAL AMOUNT OF SUCH PROPOSED EXPENDITURES;
AND
  (2) PROVIDE FOR A SEPARATE SHAREHOLDER VOTE TO AUTHORIZE SUCH PROPOSED
EXPENDITURES IN SUCH AMOUNT.
  (C)  A VIOLATION OF THE PROVISIONS OF THIS SECTION SHALL BE CONSIDERED
A BREACH OF A FIDUCIARY DUTY OF THE OFFICERS AND DIRECTORS OF THE CORPO-
RATION WHO AUTHORIZED SUCH AN EXPENDITURE. THE  OFFICERS  AND  DIRECTORS
WHO  AUTHORIZE SUCH AN EXPENDITURE WITHOUT FIRST OBTAINING SUCH AUTHORI-
ZATION OF SHAREHOLDERS SHALL BE JOINTLY  AND  SEVERALLY  LIABLE  IN  ANY
ACTION BROUGHT IN ANY COURT OF COMPETENT JURISDICTION TO ANY SHAREHOLDER
OR CLASS OF SHAREHOLDERS FOR THE AMOUNT OF SUCH EXPENDITURE.
  (D) AS USED IN THIS SECTION:
  (1)(A) "EXPENDITURE FOR POLITICAL ACTIVITIES" MEANS:
  (I) AN INDEPENDENT EXPENDITURE;
  (II)  CONTRIBUTIONS TO ANY POLITICAL PARTY, COMMITTEE, OR ELECTIONEER-
ING COMMUNICATION; AND
  (III) DUES OR OTHER PAYMENTS TO TRADE ASSOCIATIONS OR OTHER TAX EXEMPT
ORGANIZATIONS.
  (B) SUCH TERM SHALL 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
ADMINISTRATIVE PERSONNEL AND THEIR FAMILIES; OR
  (III) THE ESTABLISHMENT, ADMINISTRATION, AND SOLICITATION OF  CONTRIB-
UTIONS  TO  A  SEPARATE  SEGREGATED  FUND  TO  BE UTILIZED FOR POLITICAL
PURPOSES BY A CORPORATION.
  (C) EACH INSTITUTIONAL INVESTMENT  MANAGER  SUBJECT  TO  THIS  SECTION
SHALL, AT LEAST ANNUALLY, MAKE PUBLIC A STATEMENT OF HOW IT VOTED ON ANY
SHAREHOLDER VOTE PROVIDED FOR UNDER THIS SECTION THAT OCCURRED SINCE THE
MANAGER'S LAST SUCH STATEMENT, UNLESS SUCH VOTE IS OTHERWISE REQUIRED TO
BE  REPORTED  PUBLICLY  BY RULE OR REGULATION OF THE SECRETARY OF STATE,
NOT LATER THAN ONE HUNDRED EIGHTY DAYS AFTER THE EFFECTIVE DATE OF  THIS
SECTION.
  (D)  NOTWITHSTANDING  ANY  OTHER PROVISION OF FEDERAL OR STATE LAW, NO
PERSON MAY BRING ANY CIVIL, CRIMINAL, OR ADMINISTRATIVE  ACTION  AGAINST

S. 43--A                            3

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 A CORPORATION SUBJECT
TO  THE PROVISIONS OF THIS SECTION BECAUSE OF EXPENDITURES FOR POLITICAL
ACTIVITIES MADE BY THAT CORPORATION.
  (E) THE PROVISIONS OF SECTION 613 (LIMITATIONS ON RIGHT TO VOTE) SHALL
NOT APPLY TO A VOTE OF THE SHAREHOLDERS AS PROVIDED IN THIS SECTION.
  (2) "INDEPENDENT EXPENDITURE" MEANS A MONETARY OR IN-KIND  EXPENDITURE
IN  SUPPORT OF OR OPPOSITION TO ANY STATE, FEDERAL OR LOCAL CANDIDATE IN
A COVERED ELECTION OR BALLOT PROPOSAL, WHERE NO CANDIDATE, OR  AN  AGENT
OR  POLITICAL  COMMITTEE  AUTHORIZED  BY  A  CANDIDATE  HAS  AUTHORIZED,
REQUESTED, SUGGESTED, FOSTERED OR COOPERATED IN ANY SUCH ACTIVITY.
  (3) "ELECTIONEERING COMMUNICATION" MEANS BROADCAST,  CABLE,  SATELLITE
COMMUNICATIONS,  BILLBOARDS,  DIRECT  MAIL,  PRINT ADVERTISING, RADIO OR
NEWSPAPERS SEEN BY FIFTY OR MORE PEOPLE WITHIN NINETY DAYS OF ANY PRIMA-
RY OR GENERAL ELECTION.
S 609-B. BOARD APPROVAL OF CORPORATE EXPENDITURES FOR  POLITICAL  ACTIV-
           ITIES.
  (A) ANY INDIVIDUAL EXPENDITURE FOR POLITICAL ACTIVITIES, AS DEFINED IN
SECTION  609-A (SHAREHOLDER APPROVAL OF CORPORATE EXPENDITURES FOR POLI-
TICAL ACTIVITIES), IN AN AMOUNT OF FIFTY THOUSAND DOLLARS OR MORE, BY  A
PUBLICLY-HELD  CORPORATION SHALL BE APPROVED IN ADVANCE OF THE MAKING OF
THE EXPENDITURE BY A QUORUM, AS DEFINED IN SECTION 707 (QUORUM OF DIREC-
TORS), OF THE BOARD OF DIRECTORS OF THE CORPORATION.    THE  CORPORATION
SHALL  MAKE  PUBLICLY  AVAILABLE  THE  INDIVIDUAL VOTES OF THE DIRECTORS
REQUIRED BY THIS PARAGRAPH WITHIN FORTY-EIGHT HOURS OF THE VOTE  BY  THE
BOARD  OF  DIRECTORS,  INCLUDING  POSTING  SUCH  RESULTS  IN A CLEAR AND
CONSPICUOUS LOCATION ON THE INTERNET WEBSITE OF THE CORPORATION.
  (B) FOR PURPOSES OF DETERMINING WHETHER AN EXPENDITURE  FOR  POLITICAL
ACTIVITIES  BY AN ISSUER UNDER THE SECURITIES EXCHANGE ACT OF 1934 IS AN
INDEPENDENT EXPENDITURE UNDER THE FEDERAL ELECTION CAMPAIGN ACT OF 1971,
THE EXPENDITURE MAY NOT BE TREATED AS MADE  IN  CONCERT  OR  COOPERATION
WITH,  OR  AT  THE  REQUEST OR SUGGESTION OF, ANY CANDIDATE OR COMMITTEE
SOLELY ON THE GROUNDS THAT ANY DIRECTOR  OF  THE  ISSUER  VOTED  ON  THE
EXPENDITURE  AS  REQUIRED  UNDER  SECTION 609-A (SHAREHOLDER APPROVAL OF
CORPORATE EXPENDITURES FOR POLITICAL ACTIVITIES).
  (C) NOTWITHSTANDING THE PROVISIONS OF SECTION  601  (BY-LAWS),  WITHIN
ONE  HUNDRED  EIGHTY  DAYS  OF THE EFFECTIVE DATE OF THIS SECTION, EVERY
CORPORATION SUBJECT TO THE PROVISIONS OF THIS CHAPTER  SHALL  AMEND  ITS
CORPORATE BY-LAWS TO EXPRESSLY PROVIDE FOR A VOTE OF THE SHAREHOLDERS ON
ANY  EXPENDITURE  FOR POLITICAL ACTIVITIES, AS PROVIDED IN SECTION 609-A
(SHAREHOLDER APPROVAL OF CORPORATE  EXPENDITURES  FOR  POLITICAL  ACTIV-
ITIES),  AND  TO PROVIDE FOR A VOTE BY THE DIRECTORS OF THE BOARD OF THE
CORPORATION ISSUER ON ANY INDIVIDUAL EXPENDITURE  FOR  POLITICAL  ACTIV-
ITIES  IN  EXCESS  OF FIVE THOUSAND DOLLARS AS PROVIDED IN THIS SECTION.
THE BY-LAWS OF EVERY NEW ENTITY INCORPORATED  IN  THE  STATE  AFTER  THE
EFFECTIVE DATE OF THIS SECTION SHALL INCLUDE SUCH PROVISIONS.
  (D)  A VIOLATION OF THE PROVISIONS OF THIS SECTION SHALL BE CONSIDERED
A BREACH OF A FIDUCIARY DUTY OF THE OFFICERS AND DIRECTORS OF THE CORPO-
RATION WHO AUTHORIZED SUCH AN EXPENDITURE. THE  OFFICERS  AND  DIRECTORS
WHO  AUTHORIZE SUCH AN EXPENDITURE WITHOUT FIRST OBTAINING SUCH AUTHORI-
ZATION OF SHAREHOLDERS SHALL BE JOINTLY  AND  SEVERALLY  LIABLE  IN  ANY
ACTION BROUGHT IN ANY COURT OF COMPETENT JURISDICTION TO ANY SHAREHOLDER
OR CLASS OF SHAREHOLDERS FOR THE AMOUNT OF SUCH EXPENDITURE.
  S  4.  Not later than one hundred eighty days after the effective date
of this act, the secretary of state,  or  his  or  her  designee,  shall

S. 43--A                            4

implement  rules  and  regulations  to  require corporations to disclose
quarterly any expenditure for political  activities  (as  such  term  is
defined  in  section  609-a of the business corporation law) made during
the  preceding quarter and the individual votes by board members author-
izing such expenditures. Such a report shall be filed with the secretary
of state and provided to shareholders and shall include:
  1. the date of the expenditures;
  2. the amount of the expenditures;
  3. the name or identity of the candidate, political party,  committee,
or  electioneering  communication,  as  such  term is defined in section
304(f)(3)(A) of the Federal Election Campaign  Act  of  1971  (2  U.S.C.
434(f)(3)(A)); and
  4. if the expenditures were made for or against a candidate, including
an  electioneering communication, the office sought by the candidate and
the political party affiliation of the candidate.
  The secretary of state, or his or her designee, shall ensure that,  to
the  greatest  extent  practicable, the reports required by this act are
publicly available through the secretary of state website  in  a  manner
that is searchable, sortable, and downloadable.
  S  5.  The  state  comptroller  shall  annually conduct a study on the
compliance with the requirements of this act by public corporations  and
their  management.  Not  later  than April first of each year, the state
comptroller shall submit a report of such study  to  the  governor,  the
temporary president of the senate and the speaker of the assembly.
  S  6.  If any provision of this act, an amendment made by this act, or
the application of such provision or amendment to any person or  circum-
stance  is  held  to be unconstitutional, 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 affected thereby.
  S  7. This act shall take effect on the first of January next succeed-
ing the date upon which it shall have become a law.