Shareholder Approval of Corporate Political Spending

Description of bill requiring shareholder approval of corporate spending on political campaigns. Shareholder Approval of Corporate Political Spending

Senate Bill 540/Assembly Bill 812

March 5, 2010

Senate Bill 540 and its companion Assembly Bill 812 were introduced in response to the U.S. Supreme Court ruling in Citizens United vs. Federal Elections Commission invalidated the ban on corporate spending on elections. The legislation requires that a majority of a corporation’s shareholders approve of independent expenditures before they are made in each election cycle. Specifically, a corporation or cooperative association that makes any public communication within 60 days of an election that includes a reference to a candidate for that election, an office to be filled at that election, or a political party will be subject to registration and reporting requirements which include providing evidence of approval of election spending by a majority of shareholders or members.

SB 540 was introduced and referred to the Senate Committee on Labor, Elections and Urban Affairs on February 17, 2010 and the Democracy Campaign testified in support of the bill at a March 10 public hearing. The senate committee passed a slightly amended version on March 16 that provides broader application and makes it unenforceable if found unconstitutional. AB 812 was introduced and referred to the Assembly Committee on Elections and Campaign Reform on March 5, 2010.

The full Senate passed SB 540 on April 13 and the bill now waits for action by the Assembly.