Sec. 2. Findings
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Congress finds the following: The fiduciary duties of boards of directors and other corporate actors to corporations and their stockholders are generally established by and enforceable under State law. State law generally permits corporations discretion with respect to altering the rights of stockholders, including the process by which stockholders assert claims for breach of fiduciary duties by the board of directors or other corporate actors, limited by State law governing these fiduciary duties.
The regulation of corporations as issuers of securities authorized by Congress in the Securities Exchange Act of 1934 ( 15 U.S.C. 78a et seq. ) generally regulates corporate behavior in connection with the issuance of securities, including with respect to contractual arrangements between corporations and their stockholders via provisions in the charters and bylaws of the corporations, and does not— establish fiduciary duties of boards of directors or other corporate actors to corporations and their stockholders under Federal law; or regulate the fiduciary duties of boards of directors or other corporate actors to corporations and their stockholders under State law.
The State law fiduciary duties of boards of directors and other corporate actors establish certain norms upon which the national market system for securities has historically relied, including— boards of directors and other corporate actors generally have fiduciary duties to their respective corporations and stockholders; and the behavior of corporations as issuers of securities will generally conform to these fiduciary duties, to the benefit of the protection of investors and the public interest.
Other norms related to the public interest have historically provided critical bases upon which the national market system for securities has historically relied, including norms that large corporate issuers that are significant to the national economy— generally invest corporate resources to increase the long-term value of the corporation as a business rather than as an agent of social change; do not use corporate resources to advance narrowly political or partisan agendas; and do not use corporate resources to promote socialism, Marxism, critical race theory, or other un-American ideologies among their workforces or customers.
Though these norms are not enforceable legal duties of boards of directors or other corporate actors under Federal law, they substantially contribute to the commercial purpose and nationwide availability of the national market system for securities, which are recognized by section 2 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78b ) as principal bases for the regulation authorized by that Act. Certain large corporate issuers that are significant to the national economy have recently undertaken actions which facially violate these norms on account of apparent political bias.
Examples of such actions include the use of corporate resources to— deny goods and services to States and their political subdivisions, and private entities within such States and their political subdivisions, in response to the social policies proposed or enacted in such States and their political subdivisions, including those related to election procedures, restrictions on abortion, protections for religious freedom, and enforcement of immigration law; deny goods and services to industries and other classes of entities on the basis of characteristics of those industries and classes related to social policy, including industries involved in the sale or manufacture of firearms, operation of border security or criminal detention facilities, and performance of services for the United States military, and classes of entities based on religious belief or identity; promote race and sex stereotyping, such as those described in section 2(a) of Executive Order 13950 ( 5 U.S.C. 4103 note; relating to combating race and sex stereotyping), which include such destructive concepts that the United States is fundamentally racist or sexist, an individual should be discriminated against or receive adverse treatment solely or partly because of his or her race or sex, and meritocracy or traits such as a hard work ethic are racist or sexist, or were created by a particular race to oppress another race; and openly coordinate with political actors to pursue such actions, including— undertaking such actions upon the action (or inaction) of boards of directors and other corporate actors that are not sufficiently independent from conflicts of interest with political actors, including elected officials, political parties, news media, labor unions, nonprofit or nongovernmental organizations that advocate for changes in political or social policy through issuers, other activists affiliated with such actors, and activist investors that advocate for changes in corporate policy primarily unrelated to the pecuniary interest of the issuer; and conceding to the demands of the political actors without undertaking due care.
The prominent, open, and public facial violation of these norms by large corporate issuers that are significant to the national economy undermine the commercial purpose and nationwide availability of the national market system for securities by spending corporate resources on noncommercial and divisive, political and partisan causes. The threat these actions pose to the national market system for securities establishes a public interest in ensuring large corporate issuers that are significant to the national economy— have adequate internal procedural mechanisms to ensure the accountability of boards of directors and other corporate actors with respect to their adherence with the norms described in this section; and do not unduly burden the ability of stockholders to assert claims for breach of fiduciary duty under State law where the actions at issue in such claims facially violates those norms.
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