1Providing for shareholder vote on corporate political
2activities, for notification and disclosure of corporate
3political activities, for certain approvals of corporate
4political expenditures and for duties of the Department of
5State and the Department of the Auditor General.

6The General Assembly of the Commonwealth of Pennsylvania
7hereby enacts as follows:

8Section 1. Short title.

9This act shall be known and may be cited as the Corporate
10Political Accountability Act.

11Section 2. Declaration of policy.

12The General Assembly finds and declares as follows:

13(1) Although corporations cannot vote, corporations make
14significant political contributions and expenditures that
15directly or indirectly influence the election of candidates
16and support or oppose political causes at the Federal, State
17and local levels. Decisions to use corporate treasury funds
18for political contributions and expenditures are currently
19made by corporate boards and executives, often without the

1knowledge or consent of shareholders.

2(2) Corporations acting through their boards and
3executives have a fiduciary duty to conduct business in the
4best interests of the shareholders. Corporate boards and
5executives that use corporate funds to support and oppose
6political candidates, political parties and political causes
7in opposition to the interests of many or all of their
8shareholders may not be acting in the best interests of the
9corporation.

10(3) Historically, shareholders of corporations in the
11United States have not had a way to know of, or to influence,
12the political activities of corporations they own.
13Shareholders and the public have a right to know how these
14corporations are spending their funds to make political
15contributions or expenditures benefiting candidates,
16political parties and political causes.

17(4) Corporations should be accountable to their
18shareholders prior to making political contributions or
19expenditures affecting Federal, State and local governance
20and public policy. Requiring the express approval of a
21corporation's shareholders prior to making political
22contributions or expenditures will help establish
23accountability.

24(5) If corporations use corporate general treasury funds
25for political expenditures, then those funds should be
26clearly reported to shareholders, and shareholders should be
27able to authorize the use of corporate general treasury funds
28for political expenditures.

29Section 3. Definitions.

30The following words and phrases when used in this act shall

1have the meanings given to them in this section unless the
2context clearly indicates otherwise:

3"Contribution" or "expenditure." Includes any monetary and
4nonmonetary political contributions and expenditures not
5deductible under section 162(e)(1)(B) of the Internal Revenue
6Code of 1986 (Public Law 99-514, 26 U.S.C. § 162(e)(1)(B)),
7including, but not limited to, contributions to or expenditures
8on behalf of political candidates, political parties, political
9committees and other political entities organized and operating
10under section 527 of the Internal Revenue Code of 1986 (26
11U.S.C. § 527), and any portion of any dues or similar payments
12made to any tax exempt organization that is used for an
13expenditure or contribution and that if made directly by the
14corporation would not be deductible under section 162(e)(1)(B)
15of the Internal Revenue Code of 1986, any contribution or
16expenditure, as those terms are defined in section 301 of the
17Federal Election Campaign Act of 1971 (Public Law 92-225, 2
18U.S.C. § 431), as well as any contribution or expenditure
19defined under the act of June 3, 1937 (P.L.1333, No.320), known
20as the Pennsylvania Election Code. The term also includes any
21direct or indirect payment, distribution, loan, advance, deposit
22or gift of money, or any services, or anything of value, except
23a loan of money by a national or State bank made in accordance
24with the applicable banking laws and regulations and in the
25ordinary course of business, to any candidate, campaign
26committee or political party or organization, in connection with
27any election to any office. The term does not include:

28(1) Communications by a corporation to its stockholders
29and executive or administrative personnel and their families
30or by a labor organization to its members and their families

1on any subject.

2(2) Nonpartisan registration and get-out-the-vote
3campaigns by a corporation aimed at its stockholders and
4executive or administrative personnel and their families or
5by a labor organization aimed at its members and their
6families.

7(3) The establishment, administration and solicitation
8of contributions to a separate segregated fund to be utilized
9for political purposes by a corporation, labor organization,
10membership organization, cooperative or corporation without
11capital stock.

12"Department." The Department of State of the Commonwealth.

13"General treasury funds." Those moneys in possession of a
14corporation incorporated under the laws of Pennsylvania in the
15normal course of business, including funds from sales, accounts
16payable, loans, investments, bonds or debt instruments.

17"Issue advocacy campaign." Contributions or expenditures for
18any communication to the general public intended to encourage
19the public to contact a government official regarding pending
20legislation, public policy or a government rule or regulation.
21The term does not include contributions or expenditures for
22registered lobbyists or other persons employed by the
23corporation to lobby directly Federal or State government
24officials.

25"Known at the time of the authorization vote." At the time
26the corporation seeks authorization from shareholders to spend
27corporate funds for political activities:

28(1) the corporation's officers, directors or employees
29have identified a specific political activity for the
30corporation to support or oppose;

1(2) corporate officers, directors or employees have
2taken steps to obligate funds to a political activity; or

3(3) the corporation has a regularly scheduled payment to
4a trade association or other entity to pay for a political
5activity in the next 12 months.

6"Majority of shareholders." Fifty percent plus one of all
7outstanding voting securities. Shareholders not casting votes
8shall not count toward affirmative authorization under this
9section.

10"Political activities." Any contributions or expenditures
11made directly or indirectly to, or in support of or opposition
12to, any candidate, political party, committee, electioneering
13communication, ballot measure campaign or an issue advocacy
14campaign. The term does not include activities defined as
15lobbying under any Federal, State or local law.

16"Separate segregated fund." A political action committee
17formed by a corporation for the purpose of making contributions
18to candidates for office or to political parties. A separate
19segregated fund which supports Federal candidates shall have the
20same meaning as that found in section 316 of the Federal
21Election Campaign Act of 1971 (Public Law 92-225, 2 U.S.C. §
22441b).

23Section 4. Shareholder vote on corporate political activities.

24(a) Annual vote.--

25(1) Any corporation incorporated in this Commonwealth
26that spends in the aggregate $10,000 or more of corporate
27treasury funds on all political activities must comply with
28the requirements of this section.

29(2) Any proxy or consent or authorization for an annual
30meeting of the shareholders of a corporation incorporated in

1this Commonwealth, or a special meeting in lieu of such
2meeting, where proxies are solicited in respect of any
3security occurring on or after six months following the date
4on which final regulations are published under subsection (d)
5shall provide for a separate resolution subject to
6shareholder vote to approve any spending of $10,000 or more
7by the corporation for any political activity.

8(3) Notwithstanding the requirement for an annual
9shareholder vote to authorize any spending of $10,000 or more
10by the corporation for any political activity, a corporation
11may request authorization for spending on political
12activities on a more frequent basis. Any authorization
13request by the corporation that is not made during an annual
14authorization shall be deemed a special authorization.

15(4) If a corporation spends less than an aggregate of
16$10,000 in a 12-month period for political activities, then
17it does not have to seek shareholder authorization for such
18spending.

19(b) Shareholder approval.--

20(1) When seeking shareholder authorization for
21expenditures for political activities, the corporation shall
22request the authority to spend a maximum dollar amount in the
23next 12 months.

24(2) If known at the time of the authorization vote, the
25company shall articulate whether the corporate treasury funds
26so authorized are intended to benefit or defeat specific
27candidates, ballot measures or issue advocacy campaigns or
28whether it will be paid to specific nonprofits or trade
29associations for political activities. The following apply:

30(i) To be effective, the authorization vote must

1garner support from a majority of shareholders.

2(ii) A vote by the shareholders to approve or
3disapprove any spending of $10,000 or more by a
4corporation for a political activity shall be binding on
5the corporation.

6(iii) Notwithstanding the requirement for an annual
7shareholder vote to authorize any spending of $10,000 or
8more by the corporation for any political activity, a
9corporation may request a special authorization for
10additional spending on political activities, provided
11that:

12(A) all spending on political activities of
13$10,000 or more must be authorized by a shareholder
14majority vote; and

15(B) for any special authorization, the company
16shall articulate whether the corporate treasury funds
17so authorized are intended to benefit or defeat
18candidates, ballot measures or issue advocacy
19campaigns or will be paid to specific nonprofits or
20trade associations for political activities at the
21time the special authorization is requested.

22(c) Director liability.--If a corporation makes an
23unauthorized contribution or expenditure for a political
24activity, then the directors at the time that the unauthorized
25contribution or expenditure was incurred are jointly and
26severally liable to repay to the corporation the amount of the
27unauthorized expenditure, with interest at the rate of 8% per
28year.

29(d) Rulemaking.--No later than six months after the
30effective date of this act, the department shall promulgate

1final regulations to implement this section.

2(e) Sole proprietorships excluded.--Notwithstanding any
3other provision of this section, nothing in this section shall
4apply a new duty to the owner of a sole proprietorship.

5Section 5. Notification to shareholders of corporate political
6activities.

7(a) Notification to shareholders.--

8(1) At least quarterly during each fiscal year, a
9corporation incorporated in this Commonwealth that makes
10contributions or expenditures for political activities must
11notify its shareholders and the department in writing of the
12nature of all its political activities, funded by either its
13separate segregated fund or through its general corporate
14treasury, including contributions or expenditures made
15directly or indirectly.

16(2) A report made pursuant to this section shall include
17the following:

18(i) The date of the contributions or expenditures.

19(ii) The amount of the contributions or
20expenditures.

21(iii) The identity of the candidate, political
22party, committee, electioneering communication, ballot
23measure campaign or issue advocacy campaign.

24(iv) If the contributions or expenditures were made
25for or against a candidate, including an electioneering
26communication as defined under Federal law, the office
27sought by the candidate and the political party
28affiliation of the candidate.

29(v) If the contributions or expenditures were made
30for or against a ballot measure, the purpose of the

1measure and whether the contributions or expenditures
2were made in support or opposition to the ballot measure.

3(vi) If the contributions or expenditures were made
4for or against an issue advocacy campaign, the nature of
5the political issue and whether the contributions were
6made in support or opposition to the political issue.

7(vii) All expenditures made by a separate segregated
8fund affiliated with the corporation.

9(b) Public disclosure.--

10(1) The quarterly reports of political activities by a
11corporation incorporated in this Commonwealth to shareholders
12shall be public records.

13(2) A copy of the reports filed pursuant to subsection
14(a)(1) shall be posted for at least one year on the
15corporation's Internet website, if any.

16Section 6. Public disclosure of corporate political activities
17by the department.

18(a) Department duty.--The quarterly reports of political
19activities by a corporation incorporated in this Commonwealth to
20shareholders shall be made publicly available by the department.

21(b) Electronic form.--A quarterly report required to be
22filed under this section shall be filed in electronic form using
23filing software approved or developed by the department in
24addition to filing in any other form that the department may
25require by regulation.

26(c) Format.--The department shall ensure that, to the
27greatest extent practicable, the quarterly reports on political
28activities are publicly available through the department's
29Internet website in a format that permits the reports to be
30searched, sorted and downloaded.

1Section 7. Report by Department of the Auditor General.

2(a) Audit.--On an annual basis, the Department of the
3Auditor General shall audit the extent of compliance or
4noncompliance with the requirements of this act by corporations
5incorporated in this Commonwealth, their management and
6shareholders, as well as the effectiveness of the department in
7meeting the reporting and disclosure requirements of this act.

8(b) Report.--Not later than April 1 of each year, the
9Department of the Auditor General shall submit to the Governor a
10report on the review required by subsection (a) for the
11preceding year.

12Section 8. Board approval for all corporate political
13expenditures.

14(a) Approval required.--Notwithstanding any other provision
15of law, no corporation and no trade, business or professional
16association shall make any campaign contribution or expenditure
17unless specifically authorized to do so whether:

18(1) By the vote of the board of directors of the
19corporation or of the executive committee of the trade,
20business or professional association at a regular or special
21meeting thereof.

22(2) By the president, vice president, secretary or
23treasurer of a corporation whom the board has specifically
24empowered to authorize such contributions or expenditures.

25(3) For a corporation, by any other person designated by
26resolution of the board of directors of a corporation to
27authorize contributions or expenditures.

28(b) Form of contribution.--No corporation, trade, business
29or professional association shall make any contribution or
30expenditure as defined under Federal or State law, other than an

1in-kind contribution or expenditure, except by check.

2Section 9. Applicability to foreign corporations.

3(a) General rule.--A foreign corporation, other than a
4foreign association or foreign nonprofit corporation, but
5including a foreign parent corporation even though it does not
6itself transact intrastate business, is subject to the
7requirements of sections 4, 5, 6 and 7, if:

8(1) the average of property, payroll and sales factors,
9as defined in section 401 of the act of March 4, 1971 (P.L.6,
10No.2), known as the Tax Reform Code of 1971, with respect to
11the foreign corporation, is more than 50% during its latest
12full income year; and

13(2) more than one-half of its outstanding voting
14securities are held of record by persons having addresses in
15this Commonwealth appearing on the books of the corporation
16on the record date for the latest meeting of shareholders
17held during its latest full income year or, if no meeting was
18held during that year, on the last day of the latest full
19income year.

20(b) Determination.--The determination of the property, 
21payroll and sales factors under subsection (a) with respect to 
22any parent corporation shall be made on a consolidated basis, 
23including in a unitary computation, after elimination of 
24intercompany transactions, the property, payroll and sales of 
25the parent and all of its subsidiaries in which it owns directly 
26or indirectly more than 50% of the outstanding shares entitled 
27to vote for the election of directors, but deducting a 
28percentage of the property, payroll and sales of any subsidiary 
29equal to the percentage minority ownership, if any, in the 
30subsidiary. For the purpose of this section, any securities held 

1to the knowledge of the issuer in the names of broker-dealers, 
2nominees for broker-dealers, including clearing corporations or 
3banks, associations or other entities holding securities in a 
4nominee name or otherwise on behalf of a beneficial owner, 
5collectively "nominee holders," shall not be considered 
6outstanding. However, if the foreign corporation requests all 
7nominee holders to certify, with respect to all beneficial 
8owners for whom securities are held, the number of shares held 
9for those beneficial owners having addresses as shown on the 
10records of the nominee holder in this Commonwealth and outside 
11of this Commonwealth, then all shares so certified shall be 
12considered outstanding and held of record by persons having 
13addresses either in this Commonwealth or outside of this 
14Commonwealth as so certified, provided that the certification so 
15provided shall be retained with the record of shareholders and 
16made available for inspection and copying. A current list of 
17beneficial owners of a foreign corporation's securities provided 
18to the corporation by one or more nominee holders or agent 
19thereof under the requirements of 17 CFR § 240.14b-1(b)(3) 
20(relating to obligation of registered brokers and dealers in 
21connection with the prompt forwarding of certain communications
22to beneficial owners) or 240.14b-2(b)(3) (relating to obligation 
23of banks, associations and other entities that exercise
24fiduciary powers in connection with the prompt forwarding of
25certain communications to beneficial owners) promulgated under 
26the Securities Exchange Act of 1934 (Public Law 48-881, 15 
27U.S.C. § 78a et seq.) shall constitute an acceptable 
28certification with respect to beneficial owners for the purposes 
29of this subsection.

30(c) Applicability.--This section does not apply to any

1corporation:

2(1) With outstanding securities listed on the New York
3Stock Exchange or the American Stock Exchange.

4(2) With outstanding securities designated as qualified
5for trading on the Nasdaq National Market of the Nasdaq Stock
6Market, or any successor thereto.

7(3) If all of its voting shares, other than directors'
8qualifying shares, are owned directly or indirectly by a
9corporation or corporations not subject to this section.

10(d) Liability.--Any party who obtains a final determination
11by a court of competent jurisdiction that the corporation failed
12to provide to the party information required to be provided by
13this act or provided the party information of the kind required
14to be provided by this act that is incorrect, then the court, in
15its discretion, shall have the power to include in its judgment
16recovery by the party from the corporation of all court costs
17and reasonable attorney fees incurred in that legal proceeding
18to the extent they relate to obtaining that final determination.

19Section 20. Effective date.

20This act shall take effect in 60 days.