Sec. 4502. Shareholder approval of corporate political activity

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The Securities Exchange Act of 1934 ( 15 U.S.C. 78a et seq.) is amended by inserting after section 14B ( 15 U.S.C. 78n–2 ) the following: In this section— the term expenditure for political activities — means— an independent expenditure (as defined in section 301(17) of the Federal Election Campaign Act of 1971 ( 52 U.S.C. 30101(17) )); an electioneering communication (as defined in section 304(f)(3) of that Act ( 52 U.S.C. 30104(f)(3) )) and any other public communication (as defined in section 301(22) of that Act ( 52 U.S.C. 30101(22) )) that would be an electioneering communication if it were a broadcast, cable, or satellite communication; or dues or other payments to trade associations or organizations described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of that Code that are, or could reasonably be anticipated to be, used or transferred to another association or organization for the purposes described in clauses

(i)or (ii); and does not include— direct lobbying efforts through registered lobbyists employed or hired by the issuer; communications by an issuer to its shareholders and executive or administrative personnel and their families; or the establishment and administration of contributions to a separate segregated fund to be utilized for political purposes by a corporation; and the term issuer does not include an investment company registered under section 8 of the Investment Company Act of 1940 ( 15 U.S.C. 80a–8 ). Each solicitation of proxy, consent, or authorization by an issuer with a class of equity securities registered under section 12 shall— contain— a description of the specific nature of any expenditure for political activities proposed to be made by the issuer for the forthcoming fiscal year that has not been authorized by a vote of the shareholders of the issuer, to the extent the specific nature is known to the issuer; and the total amount of expenditures for political activities proposed to be made by the issuer for the forthcoming fiscal year; and provide for a separate vote of the shareholders of the issuer to authorize such expenditures for political activities in the total amount described in paragraph (1). No issuer shall make an expenditure for political activities in any fiscal year unless such expenditure— is of the nature of those proposed by the issuer in subsection (b)(1); and has been authorized by a vote of the majority of the outstanding shares of the issuer in accordance with subsection (b)(2). A violation of subsection

(c)shall be considered a breach of a fiduciary duty of the officers and directors who authorized the expenditure for political activities. An officer or director of an issuer who authorizes an expenditure for political activities in violation of subsection

(c)shall be jointly and severally liable in any action brought in a court of competent jurisdiction to any person or class of persons who held shares at the time the expenditure for political activities was made for an amount equal to 3 times the amount of the expenditure for political activities. Each institutional investment manager subject to section 13(f) shall disclose not less frequently than annually how the institutional investment manager voted on any shareholder vote under subsection (a), unless the vote is otherwise required by rule of the Commission to be reported publicly. Not later than 6 months after the date of enactment of this section, the Commission shall issue rules to carry out this subsection that require that a disclosure required under paragraph (1)— be made not later than 30 days after a vote described in paragraph (1); and be made available to the public through the EDGAR system as soon as practicable. Notwithstanding any other provision of Federal or State law, if an institutional investment manager makes the disclosures required under subsection (e), no person may bring any civil, criminal, or administrative action against the 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 an issuer due to an expenditure for political activities made by the issuer. . The Securities Exchange Act of 1934 ( 15 U.S.C. 78 et seq.) is amended by adding after section 16 ( 15 U.S.C. 78p ) the following: In this section, the terms expenditure for political activities and issuer have the meanings given the terms in section 14C. Not later than 180 days after the date of enactment of this section, the Commission shall, by rule, direct the national securities exchanges and national securities associations to prohibit the listing of any class of equity security of an issuer that is not in compliance with the requirements of any portion of subsection (c). The bylaws of an issuer shall expressly provide for a vote of the board of directors of the issuer on— any expenditure for political activities in excess of $50,000; and any expenditure for political activities that would result in the total amount spent by the issuer for a particular election (as defined in section 301(1) of the Federal Election Campaign Act of 1971 ( 52 U.S.C. 30101(1) )) in excess of $50,000. An issuer shall make the votes of each member of the board of directors for a vote required under paragraph

(1)publicly available not later than 48 hours after the vote, including in a clear and conspicuous location on the internet web site of the issuer. For purposes of the Federal Election Campaign Act of 1971 ( 52 U.S.C. 30101 et seq.), an expenditure for political activities by an issuer shall not be treated as made in concert or cooperation with, or at the request or suggestion of, any candidate or committee solely because a member of the board of directors of the issuer voted on the expenditure as required under this section. . Section 13 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78m ) is amended by adding at the end the following: In this subsection, the terms expenditure for political activities and issuer have the meanings given the terms in section 14C. Not later than 180 days after the date of enactment of this subsection, the Commission shall amend the reporting rules under this section to require each issuer with a class of equity securities registered under section 12 of this title to submit to the Commission and the shareholders of the issuer a quarterly report containing— a description of any expenditure for political activities made during the preceding quarter; the date of each expenditure for political activities; the amount of each expenditure for political activities; the votes of each member of the board of directors authorizing the expenditure for political activity, as required under section 16A(c); if the expenditure for political activities was made in support of or opposed to a candidate, the name of the candidate and the office sought by, and the political party affiliation of, the candidate; and the name or identity of trade associations or organizations described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code which receive dues or other payments as described in section 14C(a)(1)(A)(iii). The Commission shall ensure that, to the greatest extent practicable, the quarterly reports required under this paragraph are publicly available through the internet web site of the Commission and through the EDGAR system in a manner that is searchable, sortable, and downloadable, consistent with the requirements under section 24. Not later than 180 days after the date of enactment of this subsection, the Commission shall, by rule, require each issuer to include in the annual report of the issuer to shareholders a summary of each expenditure for political activities made during the preceding year in excess of $10,000, and each expenditure for political activities for a particular election if the total amount of such expenditures for that election is in excess of $10,000. . The Securities and Exchange Commission shall— conduct an annual assessment of the compliance of issuers and officers and members of the boards of directors of issuers with sections 13(s), 14C, and 16A of the Securities Exchange Act of 1934, as added by this section; and submit to Congress an annual report containing the results of the assessment under paragraph (1). The Comptroller General of the United States shall periodically evaluate and report to Congress on the effectiveness of the oversight by the Securities and Exchange Commission of the reporting and disclosure requirements under sections 13(s), 14C, and 16A of the Securities Exchange Act of 1934, as added by this section.

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