Shareholders United Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 936 To amend the Securities Exchange Act of 1934 and the Federal Election Campaign Act of 1971 to prohibit a corporation from making disburse- ments for a political purpose unless the corporation has assessed the preferences of its shareholders with respect to such disbursements, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 31, 2019 Mr. RASKIN (for himself, Mr. ROUDA, Mr. JOHNSON of Georgia, Mr. CARBAJAL, Ms. NORTON, Ms. SCHAKOWSKY, Mr. SOTO, Mr. BLU- MENAUER, and Mr. POCAN) introduced the following bill; which was re- ferred to the Committee on Financial Services, and in addition to the Committee on House Administration, for a period to be subsequently de- termined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the Securities Exchange Act of 1934 and the Federal Election Campaign Act of 1971 to prohibit a corporation from making disbursements for a political purpose unless the corporation has assessed the pref- erences of its shareholders with respect to such disburse- ments, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 04:50 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H936.IH H936 kjohnson on DSK79L0C42 with BILLS 2 •HR 936 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Shareholders United 2 Act of 2019’’. 3 SEC. 2. ASSESSMENT OF SHAREHOLDER PREFERENCES 4 FOR DISBURSEMENTS FOR POLITICAL PUR- 5 POSES. 6 (a) ASSESSMENT REQUIRED.—The Securities Ex- 7 change Act of 1934 (15 U.S.C. 78a et seq.) is amended 8 by inserting after section 10D the following: 9 ‘‘SEC. 10E. ASSESSMENT OF SHAREHOLDER PREFERENCES 10 FOR DISBURSEMENTS FOR POLITICAL PUR- 11 POSES. 12 ‘‘(a) ASSESSMENT REQUIRED BEFORE MAKING A 13 DISBURSEMENT FOR A POLITICAL PURPOSE.— 14 ‘‘(1) REQUIREMENT.—An issuer with an equity 15 security listed on a national securities exchange may 16 not make a disbursement for a political purpose un- 17 less— 18 ‘‘(A) the issuer has in place procedures to 19 assess the preferences of the shareholders of the 20 issuer with respect to making such disburse- 21 ments; and 22 ‘‘(B) such an assessment has been made 23 within the 1-year period ending on the date of 24 such disbursement. 25 VerDate Sep 11 2014 04:50 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H936.IH H936 kjohnson on DSK79L0C42 with BILLS 3 •HR 936 IH ‘‘(2) TREATMENT OF ISSUERS WHOSE SHARE- 1 HOLDERS ARE PROHIBITED FROM EXPRESSING 2 PREFERENCES.—Notwithstanding paragraph (1), an 3 issuer described under such paragraph with proce- 4 dures in place to assess the preferences of its share- 5 holders with respect to making disbursements for 6 political purposes shall not be considered to meet the 7 requirements of such paragraph if a majority of the 8 number of the outstanding equity securities of the 9 issuer are held by persons who are prohibited from 10 expressing partisan or political preferences by law, 11 contract, or the requirement to meet a fiduciary 12 duty. 13 ‘‘(b) ASSESSMENT REQUIREMENTS.—The assess- 14 ment described under subsection (a) shall assess— 15 ‘‘(1) which types of disbursements for a polit- 16 ical purpose the shareholder believes the issuer 17 should make; 18 ‘‘(2) whether the shareholder believes that such 19 disbursements should be made in support of, or in 20 opposition to, Republican, Democratic, Independent, 21 or other political party candidates and political com- 22 mittees; 23 VerDate Sep 11 2014 04:50 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H936.IH H936 kjohnson on DSK79L0C42 with BILLS 4 •HR 936 IH ‘‘(3) whether the shareholder believes that such 1 disbursements should be made with respect to elec- 2 tions for Federal, State, or local office; and 3 ‘‘(4) such other information as the Commission 4 may specify, by rule. 5 ‘‘(c) DISBURSEMENT FOR A POLITICAL PURPOSE DE- 6 FINED.— 7 ‘‘(1) IN GENERAL.—For purposes of this sec- 8 tion, the term ‘disbursement for a political purpose’ 9 means any of the following: 10 ‘‘(A) A disbursement for an independent 11 expenditure, as defined in section 301(17) of 12 the Federal Election Campaign Act of 1971 (52 13 U.S.C. 30101(17)). 14 ‘‘(B) A disbursement for an electioneering 15 communication, as defined in section 304(f) of 16 the Federal Election Campaign Act of 1971 (52 17 U.S.C. 30104(f)). 18 ‘‘(C) A disbursement for any public com- 19 munication, as defined in section 301(22) of the 20 Federal Election Campaign Act of 1971 (52 21 U.S.C. 30101(22))— 22 ‘‘(i) which expressly advocates the 23 election or defeat of a clearly identified 24 candidate for election for Federal office, or 25 VerDate Sep 11 2014 04:50 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H936.IH H936 kjohnson on DSK79L0C42 with BILLS 5 •HR 936 IH is the functional equivalent of express ad- 1 vocacy because, when taken as a whole, it 2 can be interpreted by a reasonable person 3 only as advocating the election or defeat of 4 a candidate for election for Federal office; 5 or 6 ‘‘(ii) which refers to a clearly identi- 7 fied candidate for election for Federal of- 8 fice and which promotes or supports a can- 9 didate for that office, or attacks or opposes 10 a candidate for that office, without regard 11 to whether the communication expressly 12 advocates a vote for or against a candidate 13 for that office. 14 ‘‘(D) Any other disbursement which is 15 made for the purpose of influencing the out- 16 come of an election for a public office. 17 ‘‘(E) Any transfer of funds to another per- 18 son which is made with the intent that such 19 person will use the funds to make a disburse- 20 ment described in subparagraphs (A) through 21 (D), or with the knowledge that the person will 22 use the funds to make such a disbursement. 23 VerDate Sep 11 2014 02:24 Feb 13, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H936.IH H936 kjohnson on DSK79L0C42 with BILLS 6 •HR 936 IH ‘‘(2) EXCEPTIONS.—The term ‘disbursement 1 for a political purpose’ does not include any of the 2 following: 3 ‘‘(A) Any disbursement made from a sepa- 4 rate segregated fund of the corporation under 5 section 316 of the Federal Election Campaign 6 Act of 1971 (52 U.S.C. 30118). 7 ‘‘(B) Any transfer of funds to another per- 8 son which is made in a commercial transaction 9 in the ordinary course of any trade or business 10 conducted by the corporation or in the form of 11 investments made by the corporation. 12 ‘‘(C) Any transfer of funds to another per- 13 son which is subject to a written prohibition 14 against the use of the funds for a disbursement 15 for a political purpose. 16 ‘‘(d) OTHER DEFINITIONS.—In this section, each of 17 the terms ‘candidate’, ‘election’, ‘political committee’, and 18 ‘political party’ has the meaning given such term under 19 section 301 of the Federal Election Campaign Act of 1971 20 (52 U.S.C. 30101).’’. 21 (b) CONFORMING AMENDMENT TO FEDERAL ELEC- 22 TION CAMPAIGN ACT OF 1971 TO PROHIBIT DISBURSE- 23 MENTS BY CORPORATIONS FAILING TO ASSESS PREF- 24 ERENCES.—Section 316 of the Federal Election Campaign 25 VerDate Sep 11 2014 04:50 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H936.IH H936 kjohnson on DSK79L0C42 with BILLS 7 •HR 936 IH Act of 1971 (52 U.S.C. 30118) is amended by adding at 1 the end the following new subsection: 2 ‘‘(d) PROHIBITING DISBURSEMENTS BY CORPORA- 3 TIONS FAILING TO ASSESS SHAREHOLDER PREF- 4 ERENCES.— 5 ‘‘(1) PROHIBITION.—It shall be unlawful for a 6 corporation to make a disbursement for a political 7 purpose unless the corporation has in place proce- 8 dures to assess the preferences of its shareholders 9 with respect to making such disbursements, as pro- 10 vided in section 10E of the Securities Exchange Act 11 of 1934. 12 ‘‘(2) DEFINITION.—In this section, the term 13 ‘disbursement for a political purpose’ has the mean- 14 ing given such term in section 10E(c) of the Securi- 15 ties Exchange Act of 1934.’’. 16 (c) EFFECTIVE DATE.—The amendments made by 17 this section shall apply with respect to disbursements 18 made on or after December 31, 2019. 19 Æ VerDate Sep 11 2014 02:24 Feb 13, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\H936.IH H936 kjohnson on DSK79L0C42 with BILLS