|Friday, 02 September 2011 09:33|
On August 3, 2011, the Committee on Disclosure of Corporate Political Spending submitted a Petition for Rulemaking to the Securities and Exchange Commission (“SEC”) pursuant to Section 14 of the Securities Exchange Act of 1934. The proposal would require certain publicly traded companies to disclose their political contributions.
According to the Committee, “[s]ince 2004, responding to shareholder demand for information about political spending, large public companies have increasingly agreed voluntarily to adopt policies requiring disclosure of the company’s spending on politics … [a]bsent disclosure, shareholders are unable to hold directors and executives accountable when they spend corporate funds on politics in a way that departs from shareholder interests.”
This petition arose, in part, out of the 2010 Supreme Court decision, Citizens United v. Federal Election Commission, which overturned portions of the McCain-Feingold Act that legalized independent corporate political spending.
This proposal could impact the business and operations of public companies and, some argue, could discourage corporate and individual participation in the political process. The Committee’s proposal would not apply to privately held companies. If this petition develops into a proposed rule, a public comment period and opportunities for stakeholders to share their concerns for the proposed rule will be provided as the SEC considers the petition.
The Congress may look in to this matter during the upcoming fall session. It is worth noting that publicly held companies are allowed to make political contributions in twenty-eight (28) states.
We suggest that interested companies and individuals remain aware of the developments with regard to this issue. If you would like further information or advice specific to your business, please contact us. Please follow this link to download a copy of the Committee’s petition.