A hot topic we’ve been tracking closely this year concerns the regulatory and legal battles over corporate political activity disclosure. This past week has been notable in two respects.
As we’ve previously reported here, in December 2012 the Securities and Exchange Commission (“SEC”) identified potential rulemakings that it might undertake in 2013. Among the items listed in the government-wide “Unified Agenda” was a proposed rulemaking on “Disclosure Regarding the Use of Corporate Resources for Political Activities,” with an April 2013 timetable. But April has come and gone, and there are still few hints as to whether the SEC will take up this agenda item or let it languish.
The issue of corporate political disclosure has, however, continued to increase in visibility, perhaps prompting the reintroduction of the Shareholder Protection Act last Friday in both houses of Congress (as S. 824 and H.R. 1734). The legislation in its current form would require a corporation to do the following under the Securities Exchange Act of 1934:
- amend its bylaws to expressly provide for a vote of the Board of Directors on any expenditure for political activities in excess of $50,000 and any aggregate expenditures exceeding $50,000 for a particular election;
- publicly disclose online the individual votes of each member of the Board of Directors within 48 hours;
- file publicly available quarterly reports that describe political expenditures, including whether the corporation pays dues or makes other donations to trade associations or section 501(c) tax-exempt organizations if it can be reasonably anticipated that those funds will support political ads;
- include in its annual report to shareholders a summary of each political expenditure made during the preceding year in excess of $10,000 and political expenditures exceeding $10,000 in the aggregate for a particular election.
This follows the introduction of a bill a few weeks ago that would prohibit the SEC from promulgating any regulations requiring corporate political activity disclosure.
Much like the SEC Unified Agenda item, it remains to be seen whether Congress will take action on these legislative proposals; the Shareholder Protection Act gained relatively little traction when first introduced in 2010. But we will certainly bring you any news of movement on these fronts.